Markets await more data

US equity markets traded in a narrow range yesterday as investors turned their attention to the upcoming data releases in the coming weeks, while the earnings season is about to come to an end. As a result, the three main indices closed yesterday’s trading session almost flat. Futures are indicating a stable opening for today’s trading.

Yen pares losses on BoJ chair remarks

The USDJPY has rallied once again in Asia, surpassing 155.0. However, its upside momentum has eased due to the hawkish remarks made by the Bank of Japan Governor, Kazuo Ueda.

Ueda stated that if there is an increase in the risks associated with rising prices, it would be appropriate to raise interest rates at a quicker pace. He also mentioned that they are closely observing the recent weakening of the Yen for policy implementation. Additionally, he highlighted the significance of currency exchange rates reflecting the underlying economic fundamentals.

The implication of renewed urgency is based on faster interest rate hikes in response to a higher-for-longer global rate trajectory.

PBOC trimming Gold purchases

The latest data from the People’s Bank of China (PBOC) shows that the country’s gold reserves increased at the slowest rate since it resumed buying in 2022.

The recent increase in Gold prices was due to multiple central banks, particularly China, purchasing large amounts of Gold. Although many central banks are still buying the yellow metal, if they decide to reduce their purchases, Gold prices may struggle to maintain their upward trend.

Since the beginning of the week, Gold has remained above $2300. A break of that support could deepen the downside retracement and retest last week’s low.

DXY recovering

The US Dollar Index has made some gains since the beginning of this week, recouping some of the losses it suffered last week. It is currently trading above the 105.55 level and is close to the 105.60 resistance area. However, this is only a short-term movement and is expected to remain limited below the 106.0 level before the downside trend resumes.

According to the price/time method, a new bearish trend has been confirmed after the close of last week. The crucial support levels to be watched closely are 104.70 and 104.40 going forward. If these levels are breached, it could further deepen the bearish outlook, leading to a possible retest of the lowest level of the index since mid-March, which is at 103.75.

EURUSD could be flagging

Following the Federal Reserve’s decision and the US Jobs Report, EURUSD reached its 1.08 resistance level last week. However, the pair has since eased its gains and declined towards 1.0740 earlier this morning.

Upon examining the shorter time frame charts, it appears that a bull flag pattern may be present. However, this pattern has not been confirmed as of yet, as it requires breaking yesterday’s high of approximately 1.0788. The time/price method has already confirmed a trend towards the upside, so the main concern now is determining the best positions for traders to take before the upside trend continues.

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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