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 Currency markets were quiet elsewhere.

Turning to the day ahead, most of the big events arrive in the second half of the session.

Euro reverse losses in fragile rebound; post-Fed outlook weighs on dollar

After two days of heavy declines, the euro rebounded on Monday amid renewed fears of an economic slowdown in the Unites States, which sparked a savage sell-off last week. The US dollar, however, holds steady near its two-week highs touched in the previous session.

Traders were hesitant to make bold bets as attention is focused heavily on Thursday’s release of U.S. third-quarter gross domestic product. The calendar also includes a flurry of upcoming speeches from Federal Reserve board members that could provide additional clarity on where the world’s biggest central bank is heading.

The Federal Reserve made a splash last week after it abandoned all plans to hike interest rates until 2020, citing concerns over slowing economic growth.

The final reading on the U.S. economy is expected to show that the GDP expanded at a 2.4 percent rate in the fourth quarter of 2018, instead of the previously reported 2.6 percent. That was a notable decline from the third quarter’s brisk 3.4 percent pace, suggesting growth could be weaker relative to the prior quarters which adds little urgency for the central bank to consider resuming its policy tightening cycle. 

Nevertheless, U.S. economic growth cooled by less than expected in the final three months when compared with the 2.2 percent median estimate of economists.

Meanwhile, inflation remained muted and there are signs that growth slowed further in the Jan-March quarter, with retail sales falling for a third straight month and housing metrics hit multi-year lows in January.

The upward revision to the fourth-quarter growth estimate, however, could keep the door open to slightly more aggressive interest rate increases from the Fed. So a strong reading could cause the buck to strengthen even more this week.

Elsewhere, the euro remained under pressure as we speak after the ECB took a decidedly dovish turn earlier this month, pledging it would be patient with further rates increases, while announcing another program to stimulate bank lending in the euro zone.

While market expectations for ECB’s interest-rate hike have already deteriorated over the past few months, the single currency was hit by this first policy update in 2019. Mario Draghi indicated on March’s meeting that the central bank would re-launch its targeted longer-term refinancing operations (TLTRO-III), which allows EU banks to provide better credit conditions in order to stimulate the real economy.

A slew of negative economic data also weighed further on investor sentiment last week. IHS Markit’s composite PMI ticked down to 51.3 this month from 51.9 in February. Figures from the bloc’s leading economies also disappointed, with Germany’s manufacturing PMI dropping for the third month in a row.

Brexit-battered British pound, already pressured by a strong greenback, fell on the European Union’s proposal to extend the date of the U.K.’s withdrawal from the bloc, but only after the Parliament backs Theresa May’s deal in a vote this week.

Economic data out of the UK last week was a mixed bag, with business climate surveys, industrial and services activity indicators all eased in March, yet the pound stayed firm right through the day.

On the metals front, Gold prices climbed to a three-day peak, moving closer to the key $1,320 resistance on Monday, as concerns about economic slowdown continued to sap investor appetite for risky assets while fueling demand for the safe-haven bullion.

The yellow metal has shown some confusion about what the Fed’s remarks about interest rate meant for the Gold outlook, but investors responded firmly to recent disappointing data, pushing the metal back above the psych $1,300 level.

26-3

Oil continues to rise on supply cuts; Dollar gains on yen

Oil prices edged higher in choppy trade on Tuesday, buoyed by expectations of tightening global supply due to production cuts led by oil cartel and its allies, aka OPEC+, as well as US sanctions on Venezuela and Iran.

Brent crude and WTI futures notched their second consecutive day of gains, rising 12 cent and 44 cents respectively, to settle at $67.33 and $59.26 per barrel. They touched their highest level in more than six months the previous week.

However, ongoing risks of a global economic slowdown weighed on the market sentiments as recession concern in Europe and China persisted, thus limiting crude gains.

Rising global oil demand, along with supply constraints from the OPEC members and non-affiliated producers like Russia, have helped keep oil above $60 a barrel over the last two months. But global outlook and prospects for growth in fuel demand remain clouded by poor economic performance in China and Europe.

Also weighing on oil markets were US sanctions on OPEC-members Iran and Venezuela. While these sanctions focused market attention earlier on tighter global supplies, but their impact has lost steam recently as it turned to be less extensive than those imposed a few years ago.

FX Markets

The dollar strengthened against Japanese yen on Thursday but weakened against the British pound and euro as Monday’s economic data offered signs that the German economy may be picking up, or at least resisting the downturn, in March.

The Ifo Institute's measure showing sentiment among Germany's businesses recorded the first increase after six consecutive declines. Data indicated that the highly-watched business climate indicator improved unexpectedly by 0.9 points to 99.6. The rally was however nowhere big enough for the shared currency to erase last week’s big losses.

Elsewhere, the yen retreated broadly on Monday after posting solid gains last week. The Japanese currency was weighed by improved sentiments in global stock markets which bolstered investors’ appetite for risk, diminishing the appeal of the safe-haven asset.

So far in March, however, the yen has gained more than two percent versus the dollar, on pace for its strongest monthly advance since December.

The British pound also rose against the dollar as Theresa May will bring her Brexit deal back to the UK parliament for the third time, which could be supportive to minor gains against other currency rivals.

May secured an extension to the deadline of leaving the European Union until April 12, which could be extended further if she gets approval by lawmakers for her plan. However, EU officials increasingly believe a no-deal Brexit is the most likely outcome.

Earlier last week, the BoE held interest rates steady, signaling no urgency to lift borrowing costs as the country prepares its exit from the European Union.

USD/JPY Technical Overview

Throughout yesterday, USD/JPY was contained to a tight, low volatility range of about 60 pips, setting the stage for a higher-volatility move on Tuesday. The pair has already surged by over 50 pips today, and the RSI is in a bullish configuration, suggesting that the path to test the previous broken support area between 110.50 - 110.80 remains open for now. The latter acted as the main ground for the trading range dating back to early February until it was broken last week. If bulls were able overcome that key barrier, a continuation toward the next level of previous-support-turned-resistance at 111.00 could be next.

27-3

Kiwi drops as rates cut looming on the horizon

The New Zealand dollar is the underperformer among the G10 currencies Wednesday and is on course for its largest daily drop in two months. The kiwi tumbled sharply after the central bank signalled it might cut interest rates due to growing economic risks, a stunning reversal that caught investors off-guard.

Although the Reserve Bank of New Zealand previously stated its next move in interest rates is a cut, but investors were embracing the idea that policy makers will be forced to hike.

The yield curve for overnight index swaps in debt markets, which reflects forecasts for short-term rates, has inverted, showing that markets expect the RBNZ to slightly lower cash rates from the current 1.75 percent.

Alongside this, the Australian dollar lost over 40 pips against the greenback to trade back below 0.7100. The head of the Reserve Bank said earlier that the chances of a rate increase or cut are evenly balanced, citing the fall in real estate prices and downside risks from an unresolved U.S.-China trade dispute.

The kiwi fell as much as 1.6 percent to $0.6796 against the dollar, its lowest level since March 13. The Aussie was also off 0.45 per cent in early London trading.

While Asia-Pacific economies continue to grow faster than its Western counterparts and inflation rate is also holding up, several data points have stoked investor worry, including evidence of a housing downturn.

A slew of flat indicators has spurred speculation that there’s no policy moves coming in the few months ahead. That has left the Australian and New Zealand dollars vulnerable once predictions for a cut started to spread. Both currencies have been the worst performers among the Group-of-10 major currencies so far in March.

Elsewhere in FX markets, the British pound whipsawed after the UK Parliament wrestled back control of Brexit from Prime Minister Theresa May, which opens the door for a series of votes on alternative EU divorce options.

May’s deal to quit the European Union was defeated in Parliament for a second time earlier this month, and she effectively pulled a third vote on her Brexit plan for now.

Technical Overview

GBPUSD was about 0.12 percent higher at $1.3220 after trading in a wide range over the course of the day.

Last week has seen the GBP/USD stage a remarkable recovery. After dipping just a shy of the 1,300 psych level on Thursday, the Cable has climbed some 250 pips to reach a high of 1.3260.

This week will perhaps be the most important period for the pair as we will have a series of Brexit-related votes. So, the outcome of these developments will have an impact on the direction of the GBP/USD. And given the extent of its latest rally, traders are likely to put more weight behind any disappointing outcome as they will look for any excuse to book profit.

Commodity Markets

Gold clawed back from a four-week high this week as the U.S. dollar strengthened following a rebound in treasury debt yields. The news moved the buck further away from a one-week low as risk aversion eased.

Investors brushed aside concerns over an inverted yield curve, which stands for the spread between 3-month bills and 10-year treasuries, as well as disappointing US data on housing starts and consumer confidence.

In particular, those concerns contributed to the Fed’s decision last week to bring its campaign to raise interest rates to an abrupt end, as it abandoned plans to tighten monetary policy in 2019.

28-3

Dollar up ahead of GDP report, jobless data cheers bulls

U.S. dollar inched higher Thursday ahead of key economic growth data while concerns eased about trade tensions between the United States and China.

European currencies gave up initial gains after the number of Americans filing applications for jobless benefits dropped unexpectedly last week, which could ease concerns about a slowdown in the labor market and US economy.

Initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 211,000 for the week ended March 21, the Labor Department said today. Data for the prior week was revised to show 5,000 less applications received than the 216,000 figure previously reported.

Investors will be watching the final print of gross domestic product growth in the fourth quarter of 2018, which was initially reported at 2.6 percent in February, but expected to fall to 2.4 percent, according to median forecast among economists polled by Reuters.

For the buck today, a weaker GDP reading would be mostly a missed opportunity of a catalyst through the rest of this week’s lull.

The greenback turned positive this week as more central banks performed a dovish U-turn in their monetary policy. The Reserve Bank of New Zealand has become the latest in this context after signalling that interest rates would be cut as the economy was stumbling due to global risks.

With the ECB expected to hold back on interest-rate increases until next year, all the leading central banks have now put on hold plans to tighten policy until there are signs of a renewed economic recovery.

The Federal Reserve started the dovish approach in monetary policy earlier this year, only to be followed by other major regulators.

Also this week, Mario Draghi, governor of the European Central Bank, changed the guidance to say that the current slowdown is more persistent as soft inflation and growth rates raise worries over the eurozone’s economic outlook.

Policy makers are now ready to further delay a planned interest rate hike if necessary, as number of risks, including a no-deal Brexit and US-china trade dispute could push the bloc into a recession, ECB president said on Wednesday.

“Just as we did at our March meeting, we would ensure that monetary policy continues to accompany the economy by adjusting our rate forward guidance to reflect the new inflation outlook,” Draghi told a conference in Frankfurt.

In the United Kingdom, Theresa May’s tough week continued as she vowed, as a last resort, to resign if her deal to usher her country out of the European Union was approved by Parliament. The prime minister has been unable to find backing for the Brexit draft she has negotiated over the last two years.

Technical Outlook

GBP/USD is trading lower on the day to test lows below 1.3100 and the bull trendline off January bottom. Technically speaking, the pair remains in an uptrend on both a medium term and short-term horizon, as the chart below shows. However, the pair has formed a “rounded high” pattern over the last two weeks, and bears have now turned their eyes to March’s lows around the 1.2959 handle.

To the upside, only a confirmed break above the 1.3200 level could expose the highs above 1.3370 next, which also marks the highest level the pair has traded at since June 2018.

29-3

Cryptocurrencies in green; Gold and Euro on track for the worst month since October

Gold prices inched higher today but continue to trade sideways, as the US currency was also consolidating and giving up some gains to other rivals. 

While uncertainty about interest rates paths in major economies continues to support the outlook for further gains, the recent bounce in U.S. treasury yields has strengthened the greenback. The bullion moves in the opposite direction from the buck as gold is priced in dollars and thus becomes more expensive as the currency gains ground.

The dollar has edged up since mid-March and today is on track for its strongest week in three with an almost two percent rise. The greenback was benefiting from softer rivals as solid US economic data has contrasted with cooling performance in other regions.

Stock market gains also weakened the safe haven appeal for the yellow metal, which some investors favor during times of market turbulence.

Spot gold prices rose 0.22 percent to $1,292.80 a troy ounce. Over the quarter, though, gold has fallen 2 percent in the last three months, its worst showing since Q3 2018.

Earlier in February, prices marched higher to near its highest level since April 2018, supported by a softer dollar after the Fed said it will be patient on future rate increases and signaled flexibility on the path for reducing its balance sheet.

Cryptocurrency Market

On Friday, the price of a single bitcoin touched a high of $4,102 this morning, an increase of 2.34 percent in the last 24 hours and its highest point in nearly five weeks. The No.1 cryptocurrency has not traded outside of the $4,060 - $3,700 range since February 24, still it has to cover much ground in order to reach its peaks hit earlier in November.

Movements within the top 10 most-traded cryptocurrencies were, however, mostly unchanged, extending a lull that has washed over the market and pushed volatility to its lowest level since January. Overall, there were no new developments in the digital assets ecosystem to substantially move coins over the course of this week.

FX Market

Elsewhere, the Euro was on course for its worst performance in five months, recovering only marginally against some of its major peers.

The shared currency fell broadly in the last two weeks and with no more trading days left in March it heads for its worst quarter since the Q2 2018. The euro softened sharply this month as investors wound back their expectations for ECB interest rate rises in 2019.

ECB governor Mario Draghi poured cold water on those expectations this week, stressing the need to be cautious in raising rates and highlighting external risks including trade wars and slower growth abroad. In his last speech, Draghi seemed very biased towards the dovish side and investors are taking that as a signal that the central bank is trying to engineer a weaker euro.

Technical Outlook

Euro has finally caught a small bid today after selling off sharply throughout the week. There is certainly some prospect of a bounce in EUR/USD, which is testing a critical long-term Fibonacci retracement (61.8% of Jan 2017-Feb 2018 bull run), but we also still need a key make-or-break level for the recent rally to persist.

The early upside wave was rejected by selling interest aligned at 1.1260, leaving doors open for a retest of the 2019 low at 1.1175. On the daily chart, the price is moving below the bears trendline and moving averages, with the 20 SMA maintaining a downward slope below the 200 SMA, while the RSI is consolidating above oversold readings, suggesting a cautiously bullish stance.

4-4

Euro ticks lower as German industrial data disappoints

The euro lost as much as 0.2 percent against the US dollar after German data signaled that economic growth and inflation rate are still flagging in the bloc’s biggest economy.

German industrial orders slowed more than expected in February, a widely watched survey showed on Thursday. The country’s Economy Ministry also reported that demand for German goods fell to its lowest level since 2017.

The single currency marched higher yesterday as growing speculation that the ECB is readying to launch a new stimulus campaign was offset by concerns that global growth is slowing in other regions, including the United States.

At the time, the shared currency rose as much as 0.79 percent against the dollar, breaking above the $1.12 level and heading toward its biggest daily gain since late March .

The euro also benefited from a broader rally in risk-correlated assets, which strengthened overnight amid optimism about trade talks between the US and China.

U.S.-Chinese talks aimed at ending a costly tariff battle continue in Beijing amid positive atmosphere, with the officials saying they were getting closer to a final deal.

A statement from the Office of the U.S. Trade Representative stated that the negotiations focused on an enforcement mechanism to ensure China abides by the deal. Reports also suggested that that 90 percent of the deal is done after China pledged to purchase a substantial amount of American goods and services.

Both countries imposed penalties on billions of each other’s goods, slowing customs clearance and suspending issuing licenses in finance and other businesses.

Economic data out of the U.S. fell short of expectations on Wednesday as companies slowed the pace of job creation in March. According to a report Wednesday from ADP and Moody’s Analytics, private payrolls increased by only 129,000 last month, well below the 170,000 growth expected by a Reuters survey of economists. The number also was a drop from the 197,000 in February, which was upwardly revised from 183,000 reported earlier.

The ADP/Moody’s release comes two days before the government’s closely watched nonfarm payrolls report. Economists expect new jobs from both the public and private sectors to rise by 170,000 and the unemployment rate to hold steady at 3.8 percent. Although the ADP figures use different a methodology in counting new jobs, it will cause an adjustment in those expectations. But overall, the recent data on labor market indicated more signs of tightening.

EUR/USD Technical Outlook

As market jitters over the bloc’s economics partially subsided, euro gained some respite from the previous two weeks’ heavy pressures. The currency pair’s short-term fate will be determined largely by Friday’s NFP report out of the US.

EUR/USD bounced off Tuesday’s 4-week low of 1.1182, but remains entrenched in a sharp downtrend for the time being. The latest bear run saw the pair breakdown below the key 1.1200 area before rebounding back above that level on Wednesday. With any return of market concerns over economy and/or strong US jobs report on Friday that potentially will lead EUR/USD to extend its entrenched downtrend that has been in place since late March.

As we explained earlier, any such continuation of the current slide below 1.1200 could then open the door for a retest of the 2019 low at 1.1175.

5-4

Blockbuster jobs data buoys US dollar;  Gold continues to struggle

Better-than-expected employment data kept the US dollar afloat, even as China and the United States are set to finalize a deal to end the trade war, which cut safe haven flows into the greenback.

The buck increased against most other major rivals on Friday as investors continued to digest the country's nonfarm payroll report for March. US jobs rose a seasonally adjusted 196,000 last month, besting market estimates for only 175,000, the Labor Department said. Additionally, the unemployment rate remained at 3.8%, a 48-year low.

In March, however, average hourly earnings for employees on nonfarm payrolls rose only 3.2% on a year-over-year basis. That was down from the prior’s month gain of 3.4%, which was the best in more than ten years.

Against a basket of six currencies, the dollar rose 0.08% to a session high of 97.36. The move, however, was relatively muted by cautious income growth and slow consumers spending, which counterbalanced the fizzy jobs data and weighed down the dollar.

Friday’s strong data comes after the release of disappointing reports earlier in March, which pointed to a further slowdown in business spending that could crimp economic growth. The US economic growth has already cooled by more than expected in the final three months when compared with the last quarter.

On Thursday, another set of data showed the number of Americans filing applications for unemployment benefits fell last week, but the four-week moving average rose to fresh highs, suggesting the labor market was slowing down.

Meanwhile, inflation remained muted amid signs that the prices growth slowed further in the Jan-March quarter, while retail sales fell for a third straight month and housing metrics hit multi-year lows in January.

Commodity Markets

Elsewhere, Gold prices fell today on the back of stronger-than-expected employment data. The precious metal also posted its fifth-straight daily loss, its longest losing streak since early March.

Gold has taken a hit since reaching its 2019 high of 1,346 in February, falling by over ten percent in the last two months.

Nevertheless, the yellow metal was supported by central banks around the globe signaling their intentions to loosen monetary policy in the near future.

Minutes from the ECB’s latest meeting showed officials discussed the re-launch its targeted longer-term refinancing operations (TLTRO-III), which allows EU banks to provide better credit conditions in order to stimulate the real economy.

The Federal Reserve, meanwhile, made a splash earlier after it abandoned all plans to hike interest rates until 2020, citing concerns over slowing economic growth.

On the short-term however, investors are away from the precious metals as they were upbeat on progress between China and the U.S. towards settling trade disputes. Officials from both nations sounded positive notes on the latest discussions, despite the two sides remaining far apart on a final deadline.

US President Donald Trump said yesterday he expects to meet Chinese leader Xi Jinping in less than four weeks to iron out the final details of an agreement. Over the past two week, both sides signaled progress on bilateral sticking points beyond their trade imbalance – with a focus on structural issues and an enforcement mechanism

8-4

Pound stable despite Brexit uncertainty; Dollar pares post-NFP gains

The British pound firmed against the dollar on Monday as the country is still debating over alternative Brexit plans. Earlier, the British currency rose off two-week lows to trade flat after Prime Minister Theresa May said she will resume EU-divorce talks with Labor leader Jeremy Corbyn later today.

The Brexit-sensitive pound fetched $1.3050, up 0.12%, benefiting from no outright bad news on the Brexit front so far. But as the Conservative government had not offered to compromise on any of its major issues, the market sentiment considers a no-deal exit is becoming more likely .

May’s cross-party negotiations were set to continue but she expressed her bouts about extending the exit date beyond April 12 with Brussels. The government has until Friday to offer up an alternative deal, with EU leaders summit on Wednesday will discuss providing more time to debate and vote on the next Brexit steps.

GBPUSD continues to trade around 1.300 with any sell-off towards the daily 200 SMA being taken as an opportunity to buy cable.

Euro has also held up well across arrange of currencies after data showing trade balance widened to €17.9 billion in February, but expectations the ECB could ease monetary policy further limit its gains.

The single currency hit a session high of $1.1250 in the wake of the German economic data and was last up 0.17 percent at $1.1244. The euro has been trading between $1.1260 and $1.1182 since late March.

German exports fell 1.3 percent month-over-month in February, but imports decreased by 1.6 percent which helped the deadline trade surplus to expand from a year ago. The data offered a hopeful sign for recovery, which lent mild support to the euro. Still, the general outlook for the region is decidedly more cautious, particularly with ECB is readying to launch a new stimulus campaign.

Elsewhere, the US dollar edged mostly lower as investors awaited the minutes of the Federal Reserve's March meeting later this week. The buck’s traders will be watching for fresh clues on the future path of monetary policy after the Fed effectively ruled out any rate increases this year and signaled flexibility on the path for unwinding its balance sheet.

The greenback pared gains it booked Friday after official data revealed a stronger-than-anticipated increase in the number of jobs created by the economy during March. The main event for traders, however, was the wage component, which showed a 3.2% yearly rise in average pay, down from the prior’s month 3.4% rise. In addition, there was a surprise fall in manufacturing jobs which is a bad signal for the future outlook.

The dollar index, which measures the greenback against a basket of six currencies, was down 0.21 percent at 97.16. While the buck has paused its rally off March, which propelled the index to a near one-year high at 97.16, its longer-term trend was still bullish.

Overall, FX markets remained rangebound as mixed economic data was offset by optimism about trade talks between the US and China, which kept sentiment subdued.

9-4

Australian dollar climbs as oil gains eclipses a new wave of trade wars

The Australian dollar rose on Tuesday after falling to a fresh four-week low earlier this month, helped by a strong surge in crude oil prices. The strength in crude prices also helped to lift stocks as well as the other growth-linked currencies including the New Zealand and Canadian dollars.

With little on the domestic ticket today, the Aussie could sustain its upside movements towards March high at 0.7167, assuming it can maintain above the key support level at 0.7120.

Oil prices embarked on a steady rise overnight aided by news of unrest in Libya, reinforcing the notion that the oil market is further tightening at the same time that OPEC cartel is making cuts to production.

Oil climbed about two percent to hit new 2019 highs, with Brent crude touching $70.77 a barrel. The prices rallied even after weak manufacturing numbers from the United States heightened worries about slowing global growth.

Even before the latest bull run, oil prices were near five-month highs as markets focused on US additional sanctions against Iran, shrugging off an increase in US crude stockpiles. Furthermore, oil prices are being propped up voluntary supply cuts by the OPEC and other major producers, which drove both benchmarks to its largest Q1 gains in nearly a decade.

Elsewhere in the currency markets, the euro rose as traders turned their attention away from reports suggesting that the United States would impose tariffs on European imports if it cannot reach a trade deal with the European Union.

The announcement surprised the markets as Washington and Brussels agreed last year to hold off on further tariffs while negotiations were taking place.

However, there are signs of strain on the single currency, along with risks ranging from the Brexit crisis to the debt issues in Italy and Greece, which are piling pressure on the region’s economy.

Trump’s escalating rhetoric on trade came as the United States and China said they made further progress in trade talks that concluded on Friday in Beijing, with Washington saying the negotiations will help the world’s two largest economies resolve their trade war.

The euro has strengthened in the past two sessions in part due to positive sentiments on progress between China and the U.S. towards settling trade disputes. Officials from both nations sounded positive notes on the latest discussions, despite the two sides remaining far apart on a final deadline. Downbeat economic data out of the Unites States have also propped up demand for the shared currency.

Turning to the weak ahead, most of the big events arrive tomorrow.

In Asia, Japan will release Domestic Corporate Goods Price Index and Machinery Orders figures for February. That will be followed trade and industrial production figures from the euro zone, along with the latest European Central Bank (ECB) interest rate decision for April.

The central is expected to stand pat and although the consensus view is for the ECB to lower its growth and inflation forecasts these expectations are largely reflected in the stock market and the exchange rates.

April 11

Euro, Dollar steady after ECB decision and FOMC minutes

The euro was steady overnight after the European Central Bank kept its benchmark interest rate unchanged and its president, Mario Draghi, gave hints of more monetary easing to come.

Investors reacted gently to Draghi’s speech on strong signs of a slowdown in the euro zone growth, mirroring a similar cautious approach by the US Federal Reserve.

The ECB governor acknowledged that economic growth in the bloc was likely to be weaker than earlier expected due to the fall-out from factors ranging from trade wars to Brexit.

“The risks surrounding the euro area growth outlook remain tilted to the downside, on account of the persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets,” Draghi said.

The region’s economy is already suffering its biggest slowdown in five years, which weakens any expectations for the policy makers to increase interest rates later this year, as its previous guidance indicates.

Draghi’s downbeat comments confirmed market speculation that the ECB is serious about introducing a new round of cheap multi-year loans to banks, known as Targeted Long-Term Refinancing Operations (TLTRO).

Among other major currencies, the Japanese yen gained as currency traders showed little reaction to a wave of policy announcements.

To a large extent, there had been a lack of reaction in the FX markets, but we may to see more activity come through today and on Friday.

The yen rose as high as 111.27 versus the dollar, then retreated to settle at 110.97, up 0.1 percent on the day.

The Swiss franc gave up all its gains versus the dollar to trade at 1.0024 and was down 0.3 percent against the euro.

The Australian dollar, often viewed as a bellwether for global risk, rose 0.4 percent to $0.7164.

Meanwhile, the greenback wobbled after minutes from the Federal Reserve’s March meeting pointed to a low probability to see more rate hikes in 2019.

The dollar index, which measures the greenback against a basket of six major currencies, dropped about 0.04 percent at 96.90 after the release of the minutes.

Traders’ attempt to push the dollar higher after Draghi’s dovish tone faded as the majority of the Fed’s officials had been in favor of pausing the rate increases, though some agreed that the central bank could resume hikes if the economic growth strengthened going forward.

“A majority of participants expected that the evolution of the economic outlook and risks to the outlook would likely warrant leaving the target range unchanged for the remainder of the year,” the minutes states.

On the economic data front, US consumer prices increased by the most since January 2018 in March amid rises in the cost of gasoline and rents.

The Labor Department reported on Wednesday that its headline CPI rose 0.4 percent last month, after edging up 0.2 percent in February. On an annual basis, the consumer price index gained 2.0 percent. Excluding the volatile food and energy components, however, the so-called core CPI rose only 0.1 percent in March.  

10 -4

Yen gains as investors weigh prospects for more trade wars

The Japanese yen rose against a basket of currencies on Wednesday, as a flare-up in trade tensions between the United States and Europe drove traders to buy the safe-haven currency.

Other safe haven assets, including the Swiss Franc and Gold, also strengthened as traders piled into perceived less risky instruments on a new wave of trade dispute between the world’s key economies. The US President Donald Trump sought to ratchet up pressure on European allies for trade concessions by proposing tariffs on $11 billion worth of their imports, his administration said on Tuesday.

The yen, which tends to rise during periods of geopolitical or financial stress, found additional support after the International Monetary Fund warned that the world economy is slowing. The IMF joins a chorus of international institutions warning that the global economy will get worse if countries keep squabbling over trade.

The agency's updated outlook lowered estimates for growth this year by 0.2 percent, from the previously estimated 3.5 percent  to 3.3 percent , its third downward revision.

The Australian dollar, seen as a proxy for risk sentiments, also sold off, slipping 0.43 percent against its U.S. counterpart after touching a three-week high yesterday.

Worries about growing trade spat also sparked a selloff in stock markets around the world with major US indexes closing in the red.

Currency markets were quiet elsewhere. the euro and sterling held steady versus the dollar as the investors prepared for the European Central Bank policy meeting and Brexit developments.

The ECB is fully expected to leave rates unchanged at a record low of 0.00 percent on Thursday, having given more hints that it is preparing to resume some of its loose policy measures. The Euro pared the decline from the previous week to maintain the narrow range carried over from Tuesday.

The Bank of England meets the same day next week and is also set to hold rates at its current levels, but the BoE may reinforce its dovish tone for monetary policy as Brexit pressures intensify.

USD/JPY Technical Outlook

As we can see on the chart, the bears are defending the 112.00 level once again. USD/JPY sold off to close below that level despite generally bullish US jobs data, and has followed through with selling pressure in the first half of this week as well.

Combined with the strong resistance level at 2019 high around 112.30 and the bearish continuation so far this week, the near-term odds suggest that the pair may dip further over the next few days once the short-term support breached at 110.97, where the daily 20 SMA coincides with the 200 SMA on the 4-hour chart.

In this case, USD/JPY breakdown could be poised to extend, with the next major downside target residing around the key 109.50 support area, which combines March lows with Fibonacci retracements of the rally from January trades.

12-4

Euro jumps on Japanese bids, Dollar steady after jobless data

The euro edged higher to a two-week high on Friday. There was no immediate explanation for the sudden surge, but some reports were describing it as a strong bid from Japan’s Mitsubishi UFJ Financial Group in order to buy certain business of Germany’s DZ Bank for a price of 5.3 billion euros.

The move came in an already-volatile session following mixed data out of the United States.

This relief rally, however, may be continued thanks to an increased appetite for the euro as some positive economic data comes further into focus. Most recently today, a gauge of German wholesale prices gained 0.3 percent in March, while Eurozone industrial production declined by 0.2%, less than the expected 0.5%.

Elsewhere, the number of Americans filing initial claims for unemployment benefits fell to a 50-year low last week and private payrolls rose steadily in March, pointing to sustained labor market strength that could keep the door open for possible interest rate hikes.

The Labor Department reported on Thursday that applications for unemployment benefits dropped 8,000 to 196,000. The figure was the lowest since 1969 and below market expectations that called for a rise to 211,000 in the week ended April 6. The four-week moving average of initial claims, considered a better measure of labor trends, also fell to its lowest level in five decades.

The US economy so far appears to be weathering an escalating trade spat with many trade partners, most recently with the European Union. The US president Donald Trump earlier this week proposed tariffs on $11 billion worth of European imports, his administration revealed on Tuesday.

This likely could push the Federal Reserve back to the track of a tighter monetary policy and raising interest rates later this year if economic growth improves.

The minutes from the Federal Reserve’s latest meeting showed that policy makers would be patient in lifting borrowing costs due to growing uncertainty over the economy’s outlook.

Separately, US data also showed that producer prices unexpectedly rose in March as increases in the costs for energy products offset a decline for services, but the overall momentum in wholesale inflation appears to be stable. With oil prices up sharply last month, the prices businesses receive for their goods and services is likely to increase further in the coming months.

The Labor Department said its producer price index edged up 0.6 percent in March, the most in five months, after adding only 0.1 percent in the month prior. On an annual basis, the PPI surged 2.2 percent, up from February’s 1.9 percent rise.

Technical Outlook

GBP/USD is trading higher on the day to test highs above 1.3100 and the bear trendline off March highs. Technically speaking, the pair remains in a consolidation phase on both a medium term and short-term horizon, as the chart below shows. However, the cable has formed a wedge pattern over the last two weeks, and buyers have now turned their eyes to March’s highs around the 1.3380 handle.

To the downside, only a confirmed break below 1.2985 ( a double bottom and daily 200 SMA) could initially expose the March low of 1.2955 next, followed by February bottom at 1,2771.

April 15

Yen, Gold edge down as risk aversion eases

The yen fell against the major rivals on Monday as hopes of a trade deal between the US and China bolstered risk appetite globally and cut demand for assets that are seen as a safe-haven investment.

U.S. Treasury Secretary Steven Mnuchin said late yesterday that the world's two largest economies are close to finalizing their trade agreement which buoyed sentiment across the board and gave risk-correlated assets a bit of a lift.

Better than expected Chinese data further weighed down on the yen and Swiss franc. China’s exports rose 14.2 percent in March on a yearly basis, ahead of the estimate of 7.3 percent increase, adding to signs that government stimulus policies are gradually kicking in.

The imports figures were not robust though after droping 7.6 percent last month from a year ago, but the overall net figures were certainly better than expected.

Recent data shows that China’s economy may be bottoming out as key indicators improve in the second quarter. That indicates investors’ bearishness toward the fall-outs of trade war with the US was overdone.

Meanwhile, the US dollar was little changed by data as investors are next focused on retail sales report for March for further indications on the strength of the domestic demand and consumer spending.

Wall Street corporate earnings will also take center stage this week with top-tier names such as Citigroup and Goldman Sachs are scheduled to report today.

Gold prices drifted lower today as the optimism about trade pushed equities higher and turned global sentiment away from the non-yielding bullion.

Gold touched $1,285 per ounce on Monday, the lowest level since April 5, pressured by improved risk sentiments and expectations that global central banks will not ease policy aggressively as previously thought.

Last week, traders were awaiting further cues for the Fed’s direction with minutes from the March meeting released on Wednesday. Investors were looking for more detailed clues after the Fed effectively ruled out any rate increases this year and signaled flexibility on the path for unwinding its balance sheet.

The yellow metal, however, is expected to continue to trade sideways, as the US currency was also consolidating and giving up some gains to other rivals.

Technical Overview

 Also negative for gold was its inability to hold above its technically important level at $1,300, a key psychological level for bullion traders.

The XAU/USD spent the first half of the day hovering around the 1,290 figure, down to 1,285 early London session after failed to push for a retest of 1,300, adding to the gloomy sentiment toward the precious metal. The short-term picture remains bearish, and as shown on the 4 hours chart, the pair remains below 20 and 200 SMAs. Technical indicators also remain directionless within negative levels, indicating that buying interest remains subdued.

April 16

UK pound little changed ahead of jobs, inflation data

The UK pound treaded water against other major currencies on Monday as forex traders awaited the next day's labor data for March.

Analysts expect the jobs report on Tuesday will show the average weekly earnings, excluding bonuses, rose by 3.4% on a yearly basis, well ahead of inflation rates which fell to 1.9% in February. With bonuses are anticipated to take average pay to 3.5% in March, the average worker’s pay may have increased by 1.6% in real terms.

A report that meets or exceeds these expectations and includes evidence of solid wage growth would boost the Brexit-battered pound in the anticipation that the BoE will soon turn more hawkish. Meeting these conditions would mean the light for raising interest rates will flash green.

Economic data out of the UK last week was a mixed bag, with business climate surveys, industrial and services activity indicators all eased in March, yet the pound stayed firm. The UK currency was also little changed against dollar and euro as traders continued to reward signs of progress in the Brexit negotiations with a steady bid for Sterling.

Economic releases will heat up in the next days with UK CPI, jobless claims and US retail sales to keep traders busy throughout the week. Central bank meetings will take a backseat, though the week will not be totally absent of policy announcements as the RBA meets today to decide on rates.

The UK currency has struggled for direction this month as the Bank of England’s MPC said in its last minutes that it expects unemployment rate to fall to its lowest level in 40 years. Meanwhile, the somewhat mixed CPI figures in the month prior soothed worries about price growth fading, but did not dispel the view the BoE may hike interest rates by early 2020.

The Brexit-sensitive pound fetched $1.3118, up 0.22%, benefiting from no outright bad news on the Brexit front so far.

Technical Overview

Last week has seen the GBP/USD stage a remarkable recovery. After dipping just a shy of the 1,300 psych level earlier this month, the Cable has climbed some 100 pips to reach a high of 1.3130.

This week will perhaps be the most important period for the pair as we will have a series of Brexit-related news. So, the outcome of these developments will have an impact on the direction of the GBP/USD. And given the extent of its latest rally, traders are likely to put more weight behind any disappointing outcome as they will look for any excuse to book profit.

Technically speaking, the pair remains in a wedge pattern. To the upside, only a confirmed break above the 1.3200 level could expose the highs above 1.3370 next, which also marks the highest level the pair has traded at since June 2018.

April 17

Aussie rises on strong China GDP; Pound flat as CPI disappoints

The Australian Dollar today rebounded from an overnight dip as concerns about a growth slowdown in China eased following solid GDP data from the world's second largest economy.

Chinese growth expanded to an annualized pace of 6.4% in the first quarter, unchanged from that registered in the Q4 2018, but came slightly above the consensus for an increase of 6.3%.

Although recent growth rates marked the economy's slowest expansion in three decades, but it still leaves China on track to meet its government-imposed target of 6.5% for 2019.

According to data released by China’s National Bureau of Statistics, Retail sales surprised on the upside, rising from 8.2% to 8.3% when markets had looked for it to remain steady, as consumers stepped up spending more in January-March quarter.

Industrial production also grew by 6.5 percent during the prior quarter, up from 5.7% previously.

Chinese economic strength is particularly important for the Australian and New Zeeland dollars because China is the biggest trading partner of both countries, with over 30% of their exports going to the Asian giant.

That relationship explains why the Aussie and Kiwi edged higher this year, amid optimism about progress between China and the U.S. towards settling trade disputes.

The Canadian dollar, although among currencies of commodity-producing countries, was struggled for direction on Wednesday, as investors remained on the sidelines ahead the release of CPI inflation figures from the Bank of Canada.

Elsewhere, the Sterling is almost unchanged in London session, following losses on Tuesday. UK consumer inflation indicators were flat in April, but matched the previous readings from March.

Core CPI came in at 1.9%, compared to forecasts of 2.0% and the same figure a month earlier. The indicator had been steadily rising, and was expected to climb to 2.0% in March, which is the BoE’s inflation target. This had led to speculation that the central bank might have to consider tightening its monetary policy as soon as the country resolves Brexit issues.

There are no other major releases on the schedule. On Thursday, Australia releases the employment change and unemployment rate. As well, the UK will report on Retail Sales for March. Tomorrow’s pending readings could be a big deal, especially when considering how currencies remain sensitive to economic growth speculation.

Technical Outlook

Since the start of the week, the euro struggled to stay resilient against the buck amid a lack of disappointing macroeconomic data releases.

Technically speaking, EUR/USD was expected to rebound off April lows earlier this month when it was testing a critical long-term Fibonacci retracement (61.8% of Jan 2017-Feb 2018 bull run), but we still need a confirmed break above the major bear trendline for the recent rally to persist.

The upside attempts were rejected twice by selling interest aligned at 1.1322, leaving doors open for a retest of the weekly low at 1.1278. On the 4H chart, the price is testing the 20 SMA but still well above the 200 moving average. In addition, the RSI is consolidating below the overbought area and already tuned to the downside, suggesting a cautiously bearish stance.

April 18

US dollar defends strength vs rivals, CAD drops on inflation data

The greenback held near its weekly lows yesterday as the Fed’s Beige Book survey of regional economic conditions came across the wires, which signaled that the US economy expanded in a moderate pace during the spring months.

Specifically, the report found that most of Fed's 12 regional districts saw “slight-to-moderate” growth in March and early April, citing trade war with China, freight costs and rising wages, among other factors.

A broadly upbeat take on the economy was expected to revive tightening bets, helping the US dollar to recover from recent losses.

The dollar, however, still defended some strength against many of its rivals. The New Zeeland dollar, meanwhile, was the worst performer among major currencies, sliding 0.8 percent to $0.6664, its lowest since early January.

Elsewhere in FX markets, Wednesday’s inflation data has caused some sharp moves in the Canadian dollar, which initially surged higher but has since come back under pressure. The reason for the initial rally was a better than expected read in headline inflation, with the CPI for March coming in at 1.9 percent from a year earlier, matching previous estimates. The prior reading was 1.5 percent.

The main focus, however, was be on the core metrics, which is the central banks’ preferred measure of inflation. The core consumer price index rose to 1.6 percent in March, beating market forecasts for only 1.3 percent rise and also above February’s reading of 1.5 percent.

With all the inflation metrics give a different impression that price pressures are on the rise, investors continue to price out the likelihood of a near term BoC hike.

Technical Outlook

A short-term look at USDCAD reveals that price is still in a rangebound channel dating back to early March. The market respected the lower bound and today’s low around 1.3273 could be seen as important support. As for resistance, the region from 1.3430 to1.3450 has stopped rallies in their tracks previously and this is an area to keep an eye on should price advance once more.

USDCAD has respected the rising trendline from February once more yesterday and if this rally can continue to take out the said near term resistance, then a retest of the longer term cap at 1.3663 could occur.

April 19

FX market subdued in holiday thin trade; Dollar holds gains after housing data

The dollar was little changed against the other major currencies in holiday thinned trade on Friday, even after soft U.S. economic data fuelled concerns over the outlook for the housing market.

Wall Street ended holiday-shortened week higher as technology stocks rebounded, ending a tumultuous week on a high note. Many major financial centres were closed for the Good Friday Easter holiday. Currency markets remain open but trade volumes were expected to remain thin.

On the release front, the U.S. Consensus Bureau and the Department of Housing and Urban Development jointly reported today that building permits dropped in March while privately-owned housing starts also slightly retreated in the month, sending opposite signals for the market condition that have been improving since the start of 2019.

Building permits surprisingly fell to a seasonally adjusted annual rate of 1.26 million, which is also lower than the February reading. The figure missed consensus projection of 1.30 million.

The greenback had gained about 0.6 per cent against a basket of six major currencies this week on factors including strong retail sales and as US-China trade tensions were seen to have eased for the time being.

U.S. retail sales expanded last month by the most since 2017 as consumers boosted their spending on cars and a range of other durable goods, the latest indication that the US economy picks up after a weak start in the first two months of 2019.

The Federal Reserve made a splash last month after it abandoned all plans to hike interest rates until 2020, citing concerns over slowing economic growth.

Elsewhere, demand for the euro continued to be weak as Thursday’s worse-than-expected euro zone’s manufacturing PMI data raised concerns and weighed further on investor sentiment.

IHS Markit’s composite PMI at the bloc’s major economies, including Germany and France, also ticked down in March.

While market expectations for ECB’s interest-rate hike have already deteriorated over the past few months, the single currency was hit by this first policy update in 2019. Mario Draghi indicated on March’s meeting that the central bank would re-launch its targeted longer-term refinancing operations (TLTRO-III), which allows EU banks to provide better credit conditions in order to stimulate the real economy.

USD/JPY Technical Outlook

As we can see on the chart, the bears are defending the 112.00 level once again. USD/JPY sold off to close below that level despite generally bullish US jobs data, and has followed through with selling pressure in the first half of this week as well.

Combined with the strong resistance level at 2019 high around 112.30 and the bearish continuation so far this week, the near-term odds suggest that the pair may dip further over the next few days once the short-term support breached at 11.50, where the daily 20 SMA coincides with the 200 SMA on the daily chart.

In this case, USD/JPY breakdown could be poised to extend, with the next major downside target residing around the key 109.50 support area, which combines March lows with Fibonacci retracements of the rally from January trades.

April 20

Weekly Outlook: Dollar awaits cues from GDP data; Euro on backfoot

The single currency gave up its early gains during last week, dropping below the 1.1250 level after it strengthened earlier close to a three-week high at 1.1322. During the start of the week, the euro struggled to stay resilient against the buck amid a lack of disappointing macroeconomic data releases.

However, the euro was hit by worse-than-expected PMI data which raised concerns over the block’s economic slowdown and thus weighed further on investors’ sentiment. On the flip side, U.S. retail sales expanded in March by the most since 2017 as consumers boosted their spending on cars and a range of other durable goods, the latest indication that the US economy picks up after a weak start in the first two months of 2019.

The dollar ended the week higher amid holiday thinned trade, even after soft U.S. economic data fuelled concerns over the health of the housing market. Fed’s Beige Book survey of regional economic conditions also signaled that the US economy expanded in a moderate pace during the spring months.

The key events this week are German Gfk Consumer Confidence Survey, as well as U.S. Existing Home Sales.

Additionally, investors will be closely watching the first print of US GDP growth in the first quarter of 2019, which is expected to fall to 1.5 percent from 1.9 the previous year. That will be also a notable decline from the fourth quarter’s 2.2 percent pace, suggesting growth could be weaker relative to the prior quarters which adds little urgency for the central bank to consider resuming its policy tightening cycle.

For the buck this week, a weaker GDP reading would be mostly a missed opportunity of a catalyst through the rest of April.

Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.

The chart below shows the pair had produced a bearish candlestick for the last week’s trades. EUR/USD is in a clear long-term downwards channel, although we had a bullish close for the week prior and also higher weekly closes over the last three weeks. However, we can’t ignore the fact that the downward trendline since September is still in place and there has certainly been a steady drift down.

As we mentioned before, there is some prospect of a bounce in EUR/USD, which is testing a critical long-term Fibonacci retracement (61.8% of Jan 2017-Feb 2018 bull run), but we also still need a clear break above the falling trendline (currently around 1.1333) for the recent rally to persist. On the other side, a confirmed break below this long-term support looks possible and may indicate a stronger breakdown, leaving doors open for a retest of the 2019 low at 1.1175.

April 23

Canadian dollar rises on higher oil prices; BoC meeting in the spotlight

Oil prices raced above $74.49 a barrel yesterday for the first time since early November after the Trump administration pledged to deepen its crackdown on Iran, a move likely to reduce the OPEC member’s crude exports and revive concerns about global supply deficit.

The White House vowed to bring Iran’s oil exports, the lifeblood of its economy, to "zero" by removing the waivers that previously allowed some countries to buy crude from the Islamic Republic. The move comes as the US and its Middle East allies seek to curb Tehran’s nuclear and missile ambitions, as well as its influence in the region.

The US Secretary of State Mike Pompeo said the administration will cancel sanctions waivers for eight countries, which issued earlier in November for Iran’s key customers in Asia. Pompeo said he wants the exports to go to zero as quickly as possible.

Brent crude oil futures were up $2.39 at $74.32 a barrel, a 3.3 percent rise, while U.S. West Texas Intermediate (WTI) crude futures increased $1.62, or 2.6 percent, to $65.66 a barrel.

Iran is among the world’s top crude oil producers, and US allies such as Japan, South Korea and Turkey have been its biggest clients, while China is taking about half the country’s export volumes.

Even before the latest bull run, oil prices were near five-month highs as markets focused on US additional sanctions, shrugging off an increase in US crude stockpiles. Furthermore, oil prices were propped up voluntary supply cuts by the OPEC and other major producers, which drove both benchmarks to its largest Q1 gains in nearly a decade.

In the FX markets, the Canadian dollar strengthened as higher oil prices, one of Canada’s major exports, outweighed flat inflation data that supported a patient approach from the central bank on raising interest rates further.

The Bank of Canada (BoC) is set to make its rate announcement on Wednesday, but after a flat reading for the CPI, a rate hike is now less certain until there’s evidence that the economy is getting back on track.

Elsewhere, the US dollar edged slightly lower Monday, weighed down by weaker-than-expected housing data for March, which bolsters the case for the Federal Reserve to maintain a dovish stance on interest rates.

The National Association of Realtors said existing home sales fell five percent from February to an annual rate of 5.30 million units. Economists were expecting a 3.5 percent drop to 5.44 million homes.

Technical Outlook

USD/CAD daily chart shows a contracting symmetrical triangle which failed to break to the upside after several bullish attempts that were rejected most recently at around 1.3400.

The weekly 20 SMA served as strong support over the last four weeks. A range breakout above the aforementioned resistance would open the door for testing March highs at 1.3450 followed by 1.3465. If it happens, the bulls will try to extend this rally towards January highs above 1.3660. 

April 24

US dollar strengthens on strong new home sales

The U.S. dollar rose Wednesday, boosted by strong housing data, while euro was weaker after business confidence gauges missed expectations and the pound was dinged by prolonged uncertainty over Brexit.

The greenback also printed a fresh two-year high against Australia’s dollar on Tuesday after a string of flat economic data reinforced expectations the RBA will move to ease policy.

Several housing reports flowed this week. US existing home sales fell five percent from February to an annual rate of 5.30 million units, but new-home sales rose to an annual rate of 692,000, their highest rate since 2017.

The euro was modestly lower against the dollar after the German IFO business climate index came in at 99.2, below March’s reading of 99.6 and missed the forecasts pointing to 99.9. The index for current economic assessment also missed forecasts, coming in at 103.3 points in April relative to 103.8 in the month prior and 103.6 anticipated.

The weak data underscored the risks facing the euro zone economy, supporting further stimulus from the ECB to prevent the region from slipping into recession.

Sterling dipped to a two-month low at $1.2913 as fears remain about where Brexit is headed. The UK currency benefited from the removal of a no-deal Brexit, but that is offset by the prospects of PM Theresa May’s replacement and the threat to the economy from prolonged uncertainty.

Elsewhere, Gold bulls were on the sidelines because of the strength in the dollar, falling to a near four-month low on Tuesday as investors preferred riskier assets, dampening the safe-haven metal’s appeal.

The yellow metal has shown some confusion about what the central banks’ recent remarks about what their policies meant for the Gold outlook, but investors responded firmly to recent positive data, pushing the metal back below the $1,266 level for the first time since December 2018.

GBP/USD is pushing higher after initial dip on the day to test broken supports at around 1.2950. Technically speaking, the pair has broken a critical support where the lower boundary of a triangle pattern coincided with the daily 200 SMA, and sellers have now turned their eyes to February bottom at 1,2771.

April 25

Euro falls to two-year lows; Gold claws higher on short covering

The euro broke below the major support of 1.1360 against the US dollar and dropped to 1.1117 Thursday, hitting a fresh 2-year low. As of writing the EUR/USD pair was trading at the lows with the negative tone intact, down 40 pips, as a stronger greenback triggered another leg lower for the single currency.

At the same time, the euro hit fresh lows versus the Swiss franc and the pound.

Demand for the dollar continued to be underpinned after data showed that the U.S. durable goods expanded at the fastest pace in more than six months in March, the latest indication that the US economy picks up after a weak start in the first two months of 2019.

However, the US dollar resumed its downtrend against the yen without any particular catalyst.

Later on the session, the buck was affected by data showing initial claims for state unemployment benefits unexpectedly rose 37,000 to a seasonally adjusted 230,000 for the week ended April 16, the Labor Department said today. Data for the prior week was revised to show 1,000 more applications received than the 192,000 figure previously reported.

The euro came under renewed selling pressure after a report earlier in the day showed that German IFO climate business dropped to 99.2 in April, confounding expectations for a 1.0% increase to 99.9.

The weak data added to concerns that the recovery in the euro zone is faltering, as worries over growing deflationary pressures in the region continued.

EUR/USD pair is about to test its fresh week lows that stand at 1.1117. A break lower could trigger more losses. Support levels might be seen at 1.110, below which opens the door towards 2017 lows at 1.0333. On the upside, the broken support-now-turned resistance at 1.1180/200 could be the crucial short-term barrier. If the euro recovers above it could extend the upside to test 1.1260.

Investors will be looking ahead to the outcome of the first print of US GDP growth in the first quarter of 2019, which is expected to rise to 2.1 percent from 1.9 the previous year. That will be also a slight decline from the fourth quarter’s 2.2 percent pace, suggesting growth could be weaker relative to the prior quarters which adds little urgency for the central bank to consider resuming its policy tightening cycle.

On the metals front, Gold clawed higher on Thursday, propelled by short-covering and physical buying in Asia. The precious metal rebounded from a 4-1/2-month low on Wednesday on short-covering as the U.S. dollar came off its 2019 highs.

The relief bounce and gold’s strong oversold conditions are leading some investors to short-cover.

Gold has tumbled more than 15 percent from a peak of $1,365.23 in April. The price levels have recently sparked a lot of physical buying across active gold-buying nations such as China and India.

April 26

Dollar mixed after GDP data came better than anticipated

Gross domestic product (GDP) in the United States continued its march forward in the first quarter with the broadest measure of US goods and services coming in stronger than expected. Beyond the headline number, however, the robust growth rate comes on top of weak inflation. US PCE is only 0.6% and Core PCE is 1.3%.

On Friday, the Commerce Department released its preliminary report of real gross domestic product for Jan-March quarter of 2019. The release showed output in the U.S. increasing at an annual rate of 3.2%, topping the consensus economist estimate of 2.5%. This is also relative to the Q4 2018 when real GDP gained 2.2%.

The growth in domestic product was due to positive contributions from personal consumption expenditure, exports, nonresidential fixed investment, and government spending at all levels.

The economic outlook was also brightened by other data this week showing retail sales and durable goods hit its best levels in more than a year. The reports extended the run of strong data on an economy that gained momentum at the tail end of the first quarter after a weak start to the year.

The upward revision to the growth estimates could keep the door open to slightly more aggressive interest rate increases from the Fed.

Elsewhere, the euro remained under pressure as we speak after the ECB took a decidedly dovish turn last month, pledging it would be patient with further rates increases, while announcing another program to stimulate bank lending in the euro zone.

While market expectations for ECB’s interest-rate hike have already deteriorated over the past few months, the single currency was hit by a slew of negative economic data also weighed further on investor sentiment last week.

On the metals front, Gold prices climbed to a 10-day peak, moving closer to the key $1,280 resistance, as concerns about economic slowdown continued to sap investor appetite for risky assets while fueling demand for the safe-haven bullion.

Meanwhile, oil prices edged lower in choppy trade on Tuesday, pressured by expectations that some OPEC members will raise output.

Rising global oil demand, along with supply constraints from the OPEC members and non-affiliated producers like Russia, have helped keep oil above $70 a barrel this month. But global outlook and prospects for growth in fuel demand remain clouded by poor economic performance in China and Europe.

USD/JPY Technical Overview

Throughout yesterday, USD/JPY was contained to a tight but volatile range of about 60 pips, setting the stage for a higher-volatility move next week. The pair has already surged by over 20 pips today, but the RSI remain in a flat configuration after yesterday’s strong dip, suggesting that the path to test the broken rising trendline around 111.80 remains open for now. The latter acted as the main ground for the bulls rally dating back to late march until it was broken this week. If buyers were able overcome that key barrier, a continuation toward the major high at 112.40 could be next.

April 30

Dollar edges down as Fed meeting comes into focus

The US dollar clawed back from a 22-month high on Monday as the market braces for FOMC April meeting. The Federal Reserve begins a two-day meeting today and is expected to release their policy statement tomorrow afternoon.

The Fed is not expected to alter interest rates, but the greenback bulls hope the committee members to resume talking about policy tightening, at least in 2020. This outcome would help strengthen the buck.

The central bank’s meeting also comes with Fed Chief Jerome Powell’s press conference Wednesday, so there is a chance for increased volatility in the FX markets.

The US will see the release of its latest consumer confidence data and ISM manufacturing PMI in the next 24 hours. This will be the final tier-one data set ahead of the Fed’s highly anticipated meeting, so it may prove especially important for the greenback.

A recent report on Friday showed that US GDP expanded 3.2% in Q1 2019, topping the consensus economist estimate of 2.5%. However, the robust growth rate comes on top of weak inflation, with the personal consumption expenditures (PCE) price index slowed to 1.8% in the 12 months through March.

Meanwhile, the Australian Dollar is keeping a close eye on China’s upcoming manufacturing PMI release as the world’s second largest economy has recently been showing positive performance, albeit by a low margin.

Turning to the euro, the shared currency has held up quite well yesterday, coming off a two-year low hit earlier last week, even despite a flat reading for business climate index. The euro held steady on the buck’s profit taking and as investors have grown skeptical of whether the US central bank will actually raise rates at all next year in the face of a mixed economic performance.

European Commission data showed on Monday that Euro zone economic sentiment eased more than expected for a tenth straight month, mainly because of a deteriorating mood in industry and services.

A monthly survey showed that economic sentiment in the 19 countries sharing the euro eased to 104.0 points in April from 105.6 in March.

The currency’s resilience in such conditions suggests it may require much support from GDP data later today to stay in demand, especially since most of other rivals are facing troubles of their own.

A solid set of data could make investors more confident that a rebound in economic conditions could take place, and perhaps help the euro regain some ground.

Technical Outlook

Looking at EUR/USD technically, resistance to advances may be found at 1.1182, the previous key support and a double bottom from March and April trades, before the 20 daily SMA and 200 4H SMA (1.1230) comes into view. Moving higher, the top of April at 1.1322 would attract attention.

On the other hand, immediate support to declines comes at recent lows of 1.1108. A downside break could open the way for a test of 2017 lows, starting with 1.0830 followed by the major low 1.0339, the lowest point the pair hit over the last 16 years.