Rick Rieder, Chief Investment Officer of global fixed income at BlackRock, the world's largest asset manager, crossed wires via Reuters late Monday while saying, “The Federal Reserve may not need to raise interest rates further to fight inflation, as the fallout from last month's turmoil in the banking sector and a series of recent labor data point to a slowing US economy.”

Additional comments

EUR/USD remains pressured

EUR/USD pays little heed to the news as it holds lower grounds near 1.0860, despite recently bouncing off the lowest levels in a one-week.

Also read: EUR/USD scales above 1.0860 ahead of Eurozone Retail Sales and US Inflation

• Silver price stays depressed after downbeat week-start, grinds near highest levels in a year.
• Overbought RSI conditions, receding bullish bias of MACD signals lure bears.
• Failure to cross ascending resistance line from late 2022 adds strength to bearish bias.
• Multiple support lines from March restrict immediate downside ahead of highlighting 100-DMA support.

Silver price (XAG/USD) makes rounds to $24.80-85 during the early hours of Tuesday’s Asian session, following a downbeat start of the week. Even so, the bright metal seesaws around the highest levels since late April 2022 marked in the last week.

That said, the commodity buyers appear running out of steam of late as the RSI (14) turns over overbought and the MACD signals also retreat within the bullish area.

Adding strength to the downside bias is the XAG/USD’s failure to cross an upward-sloping resistance line from late December 2022, close to $25.15 by the press time.

However, two ascending support lines from the previous month, respectively near $24.65 and $24.30, restrict the short-term downside of the Silver price.

Following that, the precious metal’s slump towards the $21.80-75 support zone comprising January’s low and the 100-DMA can’t be ruled out.

Meanwhile, an upside clearance of the aforementioned resistance line, close to $25.15, opens the door for the XAG/USD rally towards the April 2022 peak of $26.22.

In a case where the Silver buyers keep the reins past $26.22, the previous yearly high of around $26.95 and the $27.00 round figure will gain the market’s attention.

Silver price: Daily chart

Trend: Further downside expected

• EUR/USD has jumped above the critical resistance of 1.0860 amid a correction in the USD Index.
• Fed Williams is anticipating inflation at 3.75% and a growth rate of less than 1% this year.
• A contraction in Eurozone Retail Sales is insufficient to back a neutral stance from the ECB.

The EUR/USD pair has climbed above the immediate resistance of 1.0860 in the early Asian session. The shared currency pair rebounded firmly after buying interest above 1.0830 in the early New York session. A corrective move in the US Dollar Index (DXY) resulted in a recovery in the Euro after a sheer sell-off.

The downside bias for the major currency pair has not been over yet as investors are anticipating a hawkish stance from the Federal Reserve (Fed) for its next month’s monetary policy.

S&P500 futures showed a stellar recovery on Monday after a gap-down opening despite anxiety among investors ahead of result season. The street is worried about the earnings of commercial banks after the banking fiasco due to the collapse of Silicon Valley Bank (SVB) and Signature Bank. Also, tight credit conditions by US banks must have impacted advances needed by firms for fixed capital working capital management.

The US Dollar Index (DXY) registered a gradual correction to near 102.54 as investors ignored China-Taiwan tensions despite the continuation of drilling by the Chinese military around Taiwan Island.

The major trigger that will keep investors busy ahead is the United States Consumer Price Index (CPI) data, which will release on Wednesday. Analysts at TD Securities expect the headline inflation to rise by 0.1% in March, and the core CPI by 0.4%. They see the CPI slowing to 3.6% by the fourth quarter.

Also, the commentary from New York Fed Bank president John C. Williams conveys, Inflation will be around 3.75% this year. He further added that the growth rate will be less than 1% and the Unemployment Rate will gradually rise to 4-4.5%. On banking turmoil, Fed Williams believes that higher rates by the Fed were not the cause of recent banking stress.

On the Eurozone front, investors are awaiting the Retail Sales data for fresh impetus. Monthly Retail Sales (March) are expected to contract by 0.8% vs. an expansion of 0.3% recorded in February. And annual Retail Sales would contract further to 3.5% from a prior contraction of 2.3%.

This might delight the European Central Bank (ECB) but is not sufficient to back a neutral stance for upcoming monetary policy meeting.

“Financial system troubles that drove the central bank to provide large amounts of credit to banks is not collateral damage from the Fed’s aggressive effort to lower inflation,” Federal Reserve (Fed) Bank of New York President, as well as Fed’s Vice Chairman of the rate-setting committee, John Williams said on Monday, per Reuters.

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Additional readables

• EUR/USD stabilizes near mid-1.0800s after setting weekly low
• NY Fed: Year-ahead expected inflation rises to 4.7% in March from 4.2% in February

• AUD/USD remains depressed around three-week low, stays bearish after five-day downtrend.
• Recovery in US Treasury bond yields joins US-China tension and RBA-inflicted bearish bias to weigh on Aussie prices.
• Australia Westpac Consumer Confidence, China inflation numbers eyed for fresh impulse.

AUD/USD holds lower grounds near 0.6640 after declining in the last five consecutive days. In doing so, the Aussie pair not only justifies its risk barometer status but also respects the US Dollar’s broad recovery amid firmer yields, as well as the Reserve Bank of Australia (RBA) induced bearish bias.

That said, the previous Friday’s US employment numbers renew hawkish bets on the Federal Reserve’s (Fed) next rate hike of 0.25% in May and allowed the US Treasury yields to recover. As a result, the US 10-year and two-year Treasury bond yields rose to 3.41% and 4.0% at the latest.

US Dollar Index (DXY) traced yields towards the north and rose for the fourth day in a row while poking a one-week high on Monday, around 102.55 by the press time.

It’s worth noting that the receding fears of the banking crisis in the US and escalating US-China tension joined the firmer US Treasury bond yields to also propel the US Dollar Index, which in turn drowned AUD/USD prices. Furthermore, RBA’s pause to its rate hike trajectory in the last week also exerts downside pressure on the Aussie pair.

Amid these plays, Wall Street benchmarks closed mixed, with minor moves, whereas the other riskier assets like commodities and Antipodeans stay depressed of late.

Moving on, AUD/USD pair traders should watch Westpac Consumer Confidence for March ahead of China’s headline inflation numbers for the said month, namely the Consumer Price Index (CPI) and Producer Price Index (PPI). Given the dragon nation’s recent optimism, coupled with the downbeat mood in Australia, any disappointment from the inflation numbers of a major customer won’t be taken lightly by the Aussie pair traders. Above all, Wednesday’s US CPI and Fed Minutes will be crucial ahead of Thursday’s employment data from Canberra.

Technical analysis

A clear downside break of the one-month-old ascending support line, now immediate resistance around 0.6700, keeps AUD/USD bears hopeful of visiting the yearly low of around 0.6565.

• Gold price has stretched its recovery above $1,990.00, however, the downside remains favored.
• US labor market conditions remained tight despite tight credit conditions from US banks and high rates from the Fed.
• A surprise rebound is expected in US core inflation as earnings data is still higher due to a shortage of labor.

Gold price (XAU/USD) showed a recovery move after printing a three-day low at $1,981.38 in the Asian session. The precious metal has stretched its recovery above $1,990.00 as the US Dollar Index (DXY) has witnessed a correction after a five-day high at 102.81. The recovery move in the Gold price could be a pullback move only and the downside journey would resume as investors are expected to remain anxious ahead of the United States inflation data, which is scheduled for Wednesday.

Meanwhile, S&P500 ended Monday’s session with nominal gains as the recovery move came post a gap-down opening due to volatility inspired by the extended weekend. The US Treasury Yields recovered losses and settled above 3.41% on Monday as the Federal Reserve (Fed) is expected to hike rates again next month.

Earlier, the street was anticipating that Fed chair Jerome Powell would consider an early pause in the policy-tightening spell as tight credit conditions and higher rates would slow down the economy dramatically. However, tight labor market conditions have confirmed that a shortage of labor would be there, which will be offset by higher offerings.

This week, the annual Average Hourly Earnings data softened further to 4.2% but is well above against consistency required to tame stubborn inflation.

Going forward, the US Consumer Price Index (CPI) data will remain in the spotlight. A surprise rebound in the US inflation would cement the need for one more rate hike from the Fed. As per the consensus, the headline inflation will soften to 5.2% from the former release of 6.0%. Also, monthly headline CPI would decelerate to 0.3% from 0.4% reported earlier. While annual core inflation that excludes oil and food prices could surprisingly jump to 5.6% from the former release of 5.5%.

Gold technical analysis

Gold price has corrected sharply to near $1,987.00 after a breakout move from the Symmetrical Triangle chart pattern formed on a two-hour scale. The precious metal is at a make-or-a-break level as a breakdown from this level would trigger further weakness in the Gold price.

The 100-period Exponential Moving Average (EMA) at $1,991.00 is providing a cushion to the Gold price.

Meanwhile, the Relative Strength Index (RSI) (14) is defending itself from shifting into the bearish range of 20.00-40.00.

Gold two-hour chart

The US Dollar rose on Monday on holiday-thinned trading, amid higher US yields. On Tuesday, China will inform inflation figures, and Australia Consumer and Business Confidence. Eurozone Retail Sales are also due. Despite all those indicators, the focus is on Wednesday's US March Consumer Price Index. 

Here is what you need to know on Tuesday, April 11:

The US Dollar Index (DXY) extended its recovery and rose on Easter Monday, hitting a weekly high at 102.82, boosted by higher US yields and as equity prices performed mixed in Wall Street. The US 10-year yield settled at 3.42% while the 2-year rose above 4%. The Dow Jones rose 0.3%, the S&P 500 0.10% but the Nasdaq lost 0.03%. It was a quiet trading session with European markets closed. The Q1 earnings season kick-offs. 

Market participants continue to digest the latest US Employment numbers. On Tuesday, data to be released include March Chinese inflation (Consumer and Producer Price Index) awaiting the US CPI on Wednesday. 

EUR/USD posted the lowest close since late April around 1.0860, after finding support at 1.0830. On Tuesday, Retail Sales data from the Eurozone is due. 

GBP/USD dropped for the fourth consecutive day on Monday, extending its correction from above 1.2500. It bottomed at 1.2343 at the beginning of the American session and then trimmed losses. 

USD/JPY jumped to the highest level in almost a month, near 134.00, boosted by higher US yields. Volatility in the bond market warrant action around the Japanese Yen. On his first day as the Bank of Japan Governor, Kazuo Ueda said they want to avoid a sudden normalisation in monetary policy as it would cause a big impact on markets.

The Canadian Dollar outperformed during the American session on Monday. USD/CAD pulled back from weekly highs at 1.3550 to end the day flat around 1.3500. 

AUD/USD fell for the fifth consecutive day, posting the lowest daily close in two weeks, under 0.6650. Australia will release Consumer and Business Confidence on Tuesday, and the jobs report on Thursday. 

NZD/USD slid to weekly lows on Dollar strength but managed to rise back above 0.6200. 

Gold price fell again finding support at $1,980, and rebounded to $1,990. Silver continued to move sideways below $25.00. Bitcoin hit fresh cycle highs near $30,000 after rising more than 3% on the day. Ethereum climbed 1.60% to $1,886. 

• New Bank of Japan Governor Kazuo Ueda spurred US Dollar buying.
• Speculation that the tightening cycle is over weighed on investors' mood.
• NZD/USD is neutral-to-bearish around 0.6220, could extend its slump.

It was not a good start to the week for the New Zealand currency, as it weakened sharply against its American rival. NZD/USD fell to 0.6913 on Monday and trades at around 0.6220 ahead of Tuesday's opening. The Kiwi lost the most during European trading hours despite financial markets in the Old Continent remaining closed due to the Easter Monday Holiday.

The main market driver at the beginning of the week was the Japanese yen, which edged lower following comments from the new Bank of Japan Governor, Kazuo Ueda, replacing Haruhiko Kuroda.

Among other things, Ueda said that he has agreed with Prime Minister Fumio Kishida that there is no immediate need to change the 2013 joint statement with the government. Furthermore, he noted that a small rate hike would not be a big issue for the financial system, quite relevant after a decade of ultra-loose monetary tightening in the country.

The US Dollar benefited from JPY's broad weakness and speculation that most major central banks will soon hit the pause bottom amid the increased risk of a global recession. Central banks had started retrieving monetary support in 2022 to tame inflation, and most of them stand halfway towards their goals. Still, continued tightening has resulted in a banking crisis, while growth has turned sluggish.

Technical Outlook

NZD/USD daily chart offers a neutral stance, although the risk of a bearish continuation has increased. It trades between directionless moving averages, with the 100 SMA providing resistance around 0.6300 and the 200 SMA acting as dynamic support at 0.6160. At the same time, the pair seesaws around an also flat 20 SMA, aiming to end the day below it. Finally, technical indicators hover around their midlines with uneven downward strength, in line with another leg south.

• The United Kingdom will release relevant macroeconomic figures next Thursday.
• The American Dollar is rising on the back of a dismal market mood.
• GBP/USD is under selling pressure and could fall towards 1.2273.

GBP/USD bounced modestly from an intraday low of 1.2343,  now changing hands at around 1.2380. The pair edged sharply lower ahead of the US opening, despite the Eurozone and the United Kingdom celebrating Easter Monday, which kept local markets closed.

Wall Street, on the other hand, normally operated with US indexes trading mixed around their opening levels. The Dow Jones Industrial Average is up 0.14%, while the S&P 500 and the Nasdaq Composite remain in the red. Treasury yields, on the other hand, ticked north, with the 10-year note currently offering 3.41% and the 2-year note 4.0%.

The US Dollar advanced amid a dismal market mood, as market players are once again focused on a potential recession in the United States, following aggressive monetary tightening from the Federal Reserve (Fed) and the banking crisis that started last month.

The British Pound may find firmer directional strength on Thursday when the UK will release updates on the Gross Domestic Product, Industrial and Manufacturing Production, and the Trade Balance.

Technical Outlook

The GBP/USD pair is posting lower lows on a daily basis, in line with a bearish extension in the upcoming sessions, moreover, if the aforementioned daily low is infringed. The pair may then slide towards 1.2273, April 3 daily low, en route to 1.2189, March 24 low. Immediate resistance could be found in the 1.2440 region, with gains beyond it exposing the multi-week high set in early April at 1.2524. 

• The United States monthly employment report revived growth concerns.
• Australia will return from a long weekend publishing Westpac Consumer Confidence.
• AUD/USD declines for a fifth consecutive day near the 0.6600 figure.

The AUD/USD pair extended its intraday slump to 0.6618 after Wall Street's opening, barely bouncing from the level and currently trading in the 0.6680 price zone. The pair fell alongside US indexes, which started the day on the wrong foot amid concerns about a potential recession in the United States.

The Nonfarm Payrolls (NFP) report released on Friday showed that the US added 236,000 new jobs in March, slightly lower than the market expectation of 240,000. In addition, the Unemployment Rate edged lower to 3.5% from 3.6% in the same period, while the Labor Force Participation Rate improved to 62.6% from 62.5%. Finally, annual wage inflation, as measured by the Average Hourly Earnings, declined to 4.2% from 4.6%.

The US Dollar surged following the news as it indicated the job sector remains resilient while inflation keeps easing at a slow pace. Indeed, the NFP report was insufficient to change the Federal Reserve's (Fed) newly adopted dovish stance. The central bank is expected to hike its benchmark rate by 25 bps in April and pause afterwards. The banking crisis that started with the collapse of two American regional banks accelerated the Fed's decision to put an end to the tightening cycle.

Australia will return from a long weekend after the Easter holidays and will publish early on Tuesday, April. Westpac Consumer Confidence foreseen at 0.8% after posting 0% in March.

Technical Outlook

The AUD/USD pair is down for a fifth consecutive day and poised to extend its slump, according to technical readings in the daily chart, as the pair develops below directionless moving averages. The 20 Simple Moving Average (SMA) provides dynamic resistance just above the daily high, at 0.6685. Technical indicators, in the meantime, stand below their midlines without enough directional strength to confirm a steeper extension coming up next. A break through the 0.6600 level should encourage sellers and push AUD/USD towards the 0.6530/40 support area.

The most important economic report of the week will be the US Consumer Price Index on Wednesday. Analysts at TD Securities expect the index to rise by 0.1% in March, and the core by 0.4%. They see the CPI slowing to 3.6% by the fourth quarter.

Key quotes:

“Our estimates for the CPI report are likely to show that core price inflation cooled off modestly to a still strong m/m pace in March: We forecast inflation to print 0.1%/0.4% m/m for headline/core CPI, respectively. Importantly, we expect the report to confirm that core goods prices have shifted from subtracting from inflation to adding decidedly to it.”

“We continue to expect core inflation to settle around a still uncomfortable 0.4% m/m pace through Q2 2023.”

“We look for headline CPI to slow to 3.6% y/y in 23Q4, after closing 2022 at a booming 7.1% y/y pace. For core CPI, we also project deceleration to 3.8% y/y in 23Q4 from 6.0% in 22Q4. Finally, for the core PCE index, we forecast inflation of 3.6% y/y in 23Q4 after 4.8% y/y in 22Q4.”

• Crude oil prices retreat alongside equities at the beginning of the week.
• OPEC+'s decision to trim oil output in early April revived growth-related concerns.
• WTI is technically neutral in the near term but holding within a well-limited range.

Crude oil prices are down on Monday as a risk-off mood underpins the American currency. The black gold stands a few cents above an intraday low of $79.71 a barrel and is nearing its latest range's base.

OPEC+ oil output cut

Early April, the Organization of the Oil Exporting Countries and Allies (OPEC+) surprised market players by announcing a cut in their oil output of around 1.16 million barrels per day, pushing West Texas Intermediate (WTI) roughly 5.5% higher on April 3, leaving a $4 unfilled gap. WTI has been consolidating between $79 and $81.80 since the announcement, unable to find fresh directional impetus.

Higher energy prices have been partially responsible for skyrocketing inflation, and OPEC+'s decision came as a complete shock and revived concerns not only about price pressure but also about economic growth.

Technical Outlook

The United States crude oil consolidative phase gives no signs of changing in the near term. Technical indicators are flat in intraday charts, with modest downward slopes, which only reflect the absence of buying interest but fell short of supporting a steeper decline.

The base of the range comes as a strong static support level, with a break below $79.00 favoring a downward extension towards the $75.60 area, where the pair closed on March 31. On the other hand, the pair could accelerate its advance towards $82.65, this year's high, once above the aforementioned $81.80. 

• EUR/USD has gone into a consolidation phase near 1.0850.
• The risk-averse market environment and rising bond yields help USD gather strength.
• March inflation data from the US will be the next market driver.

EUR/USD started the new week on the back foot and touched its lowest level in a week at 1.0830 in the American session. The pair was last seen trading a few pips below 1.0850, losing 0.5% on a daily basis.

Hawkish Fed bets lift USD

Following the three-day weekend, Wall Street's main indexes opened in negative territory on Monday and helped the US Dollar find demand as a safe haven.

The March jobs report from the US, which showed that the Unemployment Rate declined to 3.5% with an increase of 236,000 in Nonfarm Payrolls (NFP), seems to have brought back hawkish Fed bets, providing an additional boost to USD. According to the CME Group FedWatch Tool, markets are currently pricing in a 72% probability of the Fed raising its policy rate by 25 basis points in early May.

Furthermore, the Federal Reserve Bank of New York's monthly consumer survey revealed that the one-year inflation expectation climbed to 4.7% from 4.2% in March's survey.

Earlier in the day, European Central Bank (ECB) policymaker Pablo Hernandez de Cos said that core inflation in the Eurozone was expected to remain elevated in the rest of the year and added that they have "ground to cover" in terms of policy. These comments, however, failed to help the Euro stay resilient against the USD.

Eurostat will release March Retail Sales data on Tuesday. More importantly, the US Bureau of Labor Statistics will publish the Consumer Price Index (CPI) data on Wednesday, which could have significant implications on the Fed's rate outlook and the USD's valuation.

Technical levels to watch for

• US Dollar accelerates its recovery on Monday after a long weekend. 
• US yields move higher following NFP, ahead of US CPI. 
• XAU/USD fails to hold above $2,000; extends correction from monthly highs. 

Gold price is falling by more than 1% on Monday following Friday’s NFP and ahead of crucial US consumer inflation numbers. XAU/USD printed a fresh six-day low near $1,980 and then trimmed losses. 

A stronger US Dollar and higher US yield weigh on the yellow metal. The US Dollar Index is having the biggest daily gain in weeks and trades at 102.75. At the same time, the US 10-year bond yield is at 3.43%, and the 2-year is back at 4.00%. 

XAU/USD bottomed at $1,981, the lowest level since last Tuesday. It is hovering below $1,990, with a bearish bias in the short term, extending the correction from the recent top at $2,031. 

Gold price technical analysis

The metal remains depressed after breaking a relevant short-term uptrend line and also after pulling back under $2,000. The primary trend is bullish and the price holds above key moving averages in the daily chart. The 20-day Simple Moving Average awaits at $1,967. 

If XAU/USD rises back above $2,000, it could recover momentum. The next resistance stands at $2,010, followed by $2,022. 

Technical levels 

The Federal Reserve Bank of New York's monthly Survey of Consumer Expectations showed on Monday that the US consumers' one-year inflation expectation rose to 4.7% compared to 4.2% in February, the lowest level since May 2021.

Further details of the publication showed that the three-year ahead expected inflation rose to 2.8% versus 2.7% of the previous month. The five-year ahead expected inflation edged lower to 2.5% from 2.6%.

"Credit access perceptions deteriorated, with the share of households reporting that it is harder to obtain credit than one year ago rising and reaching a series high", added the report. 

European Central Bank (ECB) policymaker Pablo Hernandez de Cos said on Monday that core inflation in the Eurozone is projected to remain elevated for the rest of the year, as reported by Reuters.

"If the baseline scenario published in March is confirmed, there is still ground to be covered in terms of monetary policy," de Cos added.

Market reaction

These comments don't seem to be helping the Euro find demand in the American session. As of writing, EUR/USD pair was trading at 1.0840, where it was down 0.5% on a daily basis.

• US Dollar gains momentum as stocks slide and Treasury yields rise. 
• GBP/USD looks bearish, near the 1.2340 support. 

The GBP/USD broke below 1.2380 and tumbled to 1.2342, reaching the lowest level in a week amid a stronger US Dollar across the board. The Greenback gained momentum during the American session as US yields moved to the upside. 

From NFP to CPI 

The US Dollar Index is rising for the fourth consecutive session. It is hovering around 102.65, up 0.57% for the day, at the highest level in a week as it continues to bounce from monthly lows. 

Higher US yields are helping the Greenback on Monday following the latest US economic data. The US 10-year yield stands at 3.41%, a one-week high. After the release of the Nonfarm Payrolls report on Friday, market participants are turning their focus to the US Consumer Price Index number are out on Wednesday. After the NFP, the odds of another rate hike at the FOMC May meeting rose. 

The US Dollar is driving price action on Monday. Most European markets were closed. In Wall Street, the Dow Jones is falling 0.20%, and the Nasdaq drops by 1.25% after the first minutes of trading. 

Short-term outlook 

Technical indicators favor the downside for the moment; however, after the sharp decline, some consolidation and a rebound seem likely. A recovery above 1.2395 would alleviate the bearish pressure, while above 1.2440 the outlook would change to bullish. 

The immediate support is around the 1.2340 area. A break lower should point to further losses, targeting initially the 1.2290 support area followed by last week’s low at 1.2270.

Technical levels 

• USD/CAD turns positive for the fifth straight day and rallies to over a one-week high.
• A combination of factors boosts the USD and remains supportive of the intraday rally.
• Subdued Oil prices fail to influence the Loonie or hinder the ongoing recovery move.

The USD/CAD pair attracts fresh buyers following an intraday dip to the 1.3485 region and turns positive for the fifth successive day on Monday. The intraday uptick is sponsored by the emergence of aggressive US Dollar (USD) buying and lifts spot prices to over a one-week high, around the 1.3555 region in the last hour.

Against the backdrop of reviving bets for further tightening by the Federal Reserve (Fed), the risk-off impulse boosts demand for the safe-haven USD and assists the USD/CAD pair to build on last week's rebound from the 1.3400 mark, or its lowest level since February 16. In fact, the markets are now pricing in a greater chance of a 25 bps lift-off at the next FOMC meeting in May and the bets were reaffirmed by the mostly upbeat US monthly jobs report (NFP) released on Friday.

The global risk sentiment, meanwhile, took a hit in the wake of heightening US-China tensions over Taiwan. This is evident from a fresh leg down in the equity markets, which, in turn, forces investors to take refuge in traditional safe-haven assets, including the Greenback. Furthermore, subdued action around Crude Oil prices, despite looming supply cuts from OPEC+, fails to benefit the commodity-linked Loonie. This supports prospects for a further appreciating move for the USD/CAD pair, though traders might refrain from placing fresh bets ahead of this week's key central bank event risks.

The Bank of Canada (BoC) is scheduled to announce its policy decision on Wednesday and will be accompanied by the latest US consumer inflation figures. This will be followed by the release of the FOMC meeting minutes, which will play a key role in influencing the USD price dynamics and provide a fresh directional impetus to the USD/CAD pair. Traders will further take cues from the release of the US monthly Retail Sales figures on Friday. In the meantime, expectations that the Fed is nearing the end of its rate-hiking cycle could cap the buck and act as a headwind for the major.

Technical levels to watch

• USD/JPY rallies to a one-week high and draws support from a combination of factors.
• Reviving bets for a 25 bps Fed rate hike in May boosts the USD and acts as a tailwind.
• Dovish remarks by the new BoJ Governor also contribute to the strong intraday rise.

The USD/JPY pair scales higher for the third successive day on Monday and touches a one-week high heading into the North American session. The pair is currently placed around the 133.30 mark, up nearly 0.90% for the day, with bulls now eyeing to challenge the 100-day Simple Moving Average (SMA) barrier amid broad-based US Dollar (USD) strength.

In fact, the USD Index, which tracks the Greenback against a basket of currencies, builds on last week's recovery move from over a two-month low and gains strong follow-through traction amid expectations for further rate hikes by the Federal Reserve (Fed). The markets are now pricing in a greater chance of a 25 bps lift-off at the next FOMC policy meeting in May and the bets were lifted by the mostly upbeat US monthly employment details released on Friday. This, in turn, continues to push the USD higher, which, along with dovish-sounding remarks by the new Bank of Japan (BoJ) Governor 
Kazuo Ueda, prompt aggressive short-covering around the USD/JPY pair.

During his inauguration speech, Ueda ruled out any major policy shift and said that they want to avoid a sudden normalisation in monetary policy as it would cause a big impact on markets. This, in turn, weighs heavily on the Japanese Yen (JPY) and provides an additional boost to the USD/JPY pair. That said, the risk-off impulse - as depicted by a fresh leg down in the equity markets - could lend some support to the safe-haven JPY and keep a lid on any further gains for the major, at least for the time being. Against the backdrop of worries about a deeper global economic downturn, heightened US-China tensions over Taiwan tempers investors' appetite for riskier assets.

This makes it prudent to wait for a sustained break through the 100-day SMA before positioning for any further appreciating move ahead of the US consumer inflation figures and the FOMC meeting minutes, due for release on Wednesday. Apart from this, traders will take cues from the US monthly Retail Sales figures on Friday. This will play a key role in influencing the near-term USD price dynamics and help determine the next leg of a directional move for the USD/JPY pair.

Technical levels to watch

• EUR/USD turns lower for the second successive day amid strong follow-through USD buying.
• Reviving bets for more rate hikes by the Fed and geopolitical tensions benefit the Greenback.
• The fundamental backdrop, however, warrants caution before placing aggressive bearish bets.

The EUR/USD pair attracts fresh sellers following an early uptick to the 1.0915 region and turns lower for the second successive day on Monday. This also marks the third day of a negative move in the previous four and drags spot prices to a one-week low, around the 1.0860-1.0855 region heading into the North American session.

A combination of supporting factors assists the US Dollar (USD) to gain strong follow-through traction on the first day of a new week, which, in turn, exerts downward pressure on the EUR/USD pair. In fact, the USD Index, which tracks the Greenback against a basket of currencies, spikes to a one-week high amid reviving bets for further policy tightening by the Federal Reserve (Fed). In fact, the markets are now pricing in a greater chance of a 25 bps lift-off at the next FOMC meeting in May and the bets were lifted by the mostly upbeat US employment details released on Friday. Apart from this, heightened US-China tensions over Taiwan and a generally weaker tone around the equity markets further lend support to the safe-haven buck.

Investors, however, seem convinced that the US central bank will cut rates in the second half of the year amid signs of slowing economic growth. This, along with the flight to safety, triggers a fresh leg down in the US Treasury bond yields and might hold back the USD bulls from placing aggressive bets. Furthermore, the growing acceptance of additional rate hikes by the European Central Bank (ECB) should continue to underpin the shared currency and limit the downside for the EUR/USD pair amid relatively light trading volumes. This warrants some caution before placing aggressive directional bets and positioning for an extension of the pair's recent pullback from over a two-month top, around the 1.0970-1.0975 area touched last week.

Traders might also prefer to move to the sidelines ahead of the release of the latest US consumer inflation figures and the FOMC monetary policy meeting minutes on Wednesday. This week's US economic docket also features the release of monthly Retail Sales figures, which will play a key role in influencing the near-term USD price dynamics and help determine the next leg of a directional move for the EUR/USD pair.

Technical levels to watch

New Bank of Japan (BoJ) Governor, Kazuo Ueda, said on Monday that they want to avoid a sudden normalisation in monetary policy as it would cause a big impact on markets, as reported by Reuters.

Key takeaways

"We will debate all policy options at every monetary policy meeting."

"Fully aware that global economy is slowing and further slowdown is expected."

"Positive signs are emerging in prices."

"Very possible to reach sustainable price target as wage growth strengthens."

"Will do utmost to achieve inflation target during my term while paying attention to side effects."

"Will aim to explain each policy move in plain language."

"Need to make appropriate decision before reaching that stage."

Market reaction

USD/JPY edges higher following these comments and was last seen gaining 0.3% on the day at 132.55.

• Silver regains positive traction on Monday and climbs back closer to the YTD peak.
• The technical setup favours bullish traders and supports prospects for further gains.
• Overbought RSI on the daily chart warrants caution before placing aggressive bets.

Silver attracts some dip-buying on the first day of a new week and steadily climbs back closer to the $25.00 psychological mark during the first half of the European session. The white metal is currently placed just below a nearly one-year high touched on Friday and seems poised to prolong its recent upward trajectory witnessed over the past month or so.

Last week's sustained breakout through the $24.30-$24.40 strong horizontal barrier was seen as a fresh trigger for bullish traders. Furthermore, the emergence of fresh buying ahead of the said resistance breakpoint now turned support, adds credence to the positive outlook. That said, Relative Strength Index (RSI) on the daily chart is flashing overbought conditions and warrants some caution before positioning for any further appreciating move.

Hence, it will be prudent to wait for some near-term consolidation or a modest pullback before positioning for a fresh leg up. Nevertheless, the XAG/USD seems poised to surpass the $25.10-$25.15 area and climb further towards the $25.35-$25.40 region. The momentum could get extended towards the $26.00 mark en route to the next relevant hurdle near the $26.20 area, the $26.40-$26.50 zone and the 2022 high, just ahead of the $27.00 mark.

On the flip side, any meaningful pullback is likely to attract fresh buyers and remain limited near the $24.40-$24.30 resistance-turned-support. The said area should now act as a pivotal point, which if broken decisively might prompt some technical selling. The XAG/USD might then turn vulnerable to weaken below the $24.00 mark and test the $23.60-$23.55 support area before eventually dropping to the $23.15 zone en route to the $23.00 round figure.

Silver daily chart

Key levels to watch

The new governor of Bank of Japan (BoJ), Kazuo Ueda, reiterated on Monday that they will do the utmost to achieve price stability and financial system stability, as reported by Reuters.

"It's very important for financial intermediation to smoothly play out in the economy," Ueda added and acknowledged that the BoJ faces the task of making various efforts to sustain monetary easing.

Ueda further noted that he wants to achieve the 2% inflation target during his 5-year term.

Market reaction

USD/JPY showed no immediate reaction to these comments and was last seen trading modestly higher on the day at 132.30.

• AUD/USD edges higher on Monday and snaps a four-day losing streak to a two-week low.
• Expectations for a dovish Fed pivot keep the USD bulls on the defensive and lend support.
• Geopolitical tensions and the RBA’s dovish tilt might keep a lid on any meaningful upside.

The AUD/USD pair attracts some buyers near the mid-0.6600s on the first day of a new week and moves away from a two-week low touched on Friday. Spot prices, however, lack follow-through and trade with a mild positive bias, around the 0.6675-0.6680 area during the first half of the European session.

The US Dollar (USD) struggles to preserve its modest intraday gains amid the uncertainty over the Federal Reserve's (Fed) rate-hike path and turns out to be a key factor lending some support to the AUD/USD pair. The mostly upbeat US NFP released on Friday revived bets for another 25 bps lift-off at the next FOMC meeting in May. Market participants, however, seem convinced that the Fed will cut rates in the second half of the year amid signs of slowing economic growth. This is reinforced by a fresh leg down in the US Treasury bond yields, which acts as a headwind for the Greenback.

The upside for the AUD/USD pair, however, seems capped amid the Reserve Bank of Australia's (RBA) dovish tilt last week, pausing its rate-hiking cycle following 10 consecutive raises and signalling that inflation had likely peaked. Apart from this, heightened US-China tensions over Taiwan might further contribute to keeping a lid on the risk-sensitive Aussie. This, in turn, makes it prudent to wait for strong follow-through buying before placing fresh bullish bets around the major confirming that the recent rejection slide from 100-day Simple Moving Average (SMA) has run its course.

Traders also seem reluctant and prefer to move to the sidelines ahead of the FOMC meeting minutes, due on Wednesday. This week's US economic docket also features the release of the latest consumer inflation figures and monthly retail sales data. This will play a key role in influencing the USD price dynamics and provide a fresh directional impetus to the AUD/USD pair. Nevertheless, the fundamental backdrop suggests that the path of least resistance for spot prices remains to the downside and any further move up might still be seen as an opportunity for bearish traders.

Technical levels to watch

Following his meeting with Japanese Prime Minister Fumio Kishida on Monday, new Bank of Japan (BoJ) Governor Kazuo Ueda said that they discussed the need to guide policy flexibly given economic uncertainty.

Additional takeaways

“Agreed with PM Kishida that there is no immediate need to change the 2013 joint statement with the government.”

“When uncertainty is high, govt, BoJ must communicate closely.”

“BoJ’s monetary stimulus has helped pull japan out of deflation.”

Analysts at Societe Generale said in their latest client note, “in a light data week following Easter, the main focus will be on the monthly GDP data.”

Additional quotes

“It has been highly volatile over the turn of the year because of strikes and other influences on public sector activity but we think those effects will have faded in February to give a second successive month of growth.”

“This will raise hopes that the UK might be able to avoid a recession altogether as the Office for Budget Responsibility has recently forecast.“

“The RICS housing survey is likely to show further modest improvement.”

• USD/CAD drifts lower on Monday and is weighed down by a combination of factors.
• Bullish Oil prices underpin the Loonie and exert pressure amid fresh USD selling.
• The downside seems cushioned ahead of this week’s key central bank event risks.

The USD/CAD pair attracts some sellers near the 1.3520 region on Monday and snaps a four-day winning streak. The pair is currently placed just below the 1.3500 psychological mark, down nearly 0.10% for the day, and is pressured by a combination of factors.

Crude Oil prices hold steady near a multi-month top touched last week in reaction to a new round of production cuts announced by the OPEC+, which, to a larger extent, overshadows concerns that weakening global growth may dent fuel demand. This, in turn, is seen underpinning the commodity-linked Loonie and exerting some downward pressure on the USD/CAD pair amid the emergence of some intraday selling around the US Dollar (USD).

In fact, the USD Index, which tracks the Greenback against a basket of currencies, surrenders its modest intraday gains amid the uncertainty over the Federal Reserve's (Fed) rate hike path. The mostly upbeat US NFP released on Friday revived bets for another 25 bps lift-off at the next FOMC meeting in May. Market participants, however, seem convinced that the Fed will cut rates in the second half of the year amid signs of slowing economic growth.

Expectations that the Fed is nearly done with its policy tightening lead to a fresh leg down in the US Treasury bond yields, which continue to act as a headwind for the buck and prompt fresh selling around the USD/CAD pair. The downside, however, seems cushioned as traders might refrain from placing aggressive bets ahead of the key central bank event risks - the Bank of Canada policy meeting and the release of the FOMC meeting minutes on Wednesday.

This week's US economic docket also features the release of the latest consumer inflation figures and monthly retail sales data, which will play a key role in influencing the USD and provide a fresh directional impetus to the USD/CAD pair. In the meantime, relatively thin liquidity conditions, in the wake of a holiday in most European markets, might hold back traders from placing aggressive bets and contributes to limiting losses for the major.

Technical levels to watch

International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva said that “the global economy is estimated to grow less than 3 percent in 2023, with India and China expected to account for half of the global growth this year.

Key takeaways

“Some momentum comes from emerging economies -- Asia especially is a bright spot. India and China are expected to account for half of the global growth in 2023.”

“Despite surprisingly resilient labor markets and consumer spending in most advanced economies, and the uplift from China's reopening, we expect the world economy to grow less than 3 percent in 2023.”

“Economic activity is slowing in the US and the Eurozone because of the current higher interest rates regime, thereby weighing on the demand.”

“For low-income countries, higher borrowing costs come at a time of weakening demand for their exports. And we see their per-capita income growth staying below that of emerging economies. That is a severe blow, making it even harder for low-income nations to catch up.”

Analysts at TD Securities offer a bullish outlook on WTI, in the wake of the OPEC and its allies (OPEC+) oil output cuts and US oil inventory drawdown and a potential increase in Chinese oil demand.

Key quotes

“Despite broad concerns surrounding global economic weakness and a lackluster risk appetite, crude oil continues to hold on to the strong gains made recently as the market focuses on the EIA data showing broad inventory draws and the unexpectedly large OPEC+ production cuts.”

“The crude complex is pricing a much tighter supply-demand environment for the rest of 2023, putting the previous OPEC statements suggesting a Q2 surplus, and demand concerns amid the evolving bank crisis, in the rearview mirror.”

“Notwithstanding pending economic weakness in the Western world, we judge that the combination of OPEC+ cuts, low US petroleum complex inventory levels and the upcoming sharp increase in Chinese demand will send WTI into $90+ territory in the second half of the year, with Brent not far off the triple digit mark.”

• GBP/USD attracts some dip-buying on Monday and snaps a three-day losing streak.
• The USD surrenders its modest intraday gains and lends some support to the major.
• Bulls lack conviction amid the uncertainty over the next move by the Fed and the BoE.

The GBP/USD pair reverses an intraday dip to sub-1.2400 levels and turns positive during the first half of the European session, though lacks follow-through. The pair currently trades around the 1.2420-1.2425 region, up less than 0.10%, and for now, seems to have snapped a three-day losing streak.

The US Dollar (USD) struggles to preserve its modest intraday gains amid the uncertainty over the Federal Reserve's (Fed) rate-hike path and turns out to be a key factor lending some support to the GBP/USD pair. The mostly upbeat US NFP released on Friday revived bets for another 25 bps lift-off at the next FOMC meeting in May. Market participants, however, seem convinced that the Fed will cut rates in the second half of the year amid signs of slowing economic growth. This is reinforced by a fresh leg down in the US Treasury bond yields, which acts as a headwind for the Greenback.

The upside for the GBP/USD pair, meanwhile, remains capped in the wake of the recent mixed signals from the Bank of England (BoE) members over the next policy move. It is worth recalling that the BoE MPC member Silvana Tenreyro advocated last Tuesday for the consideration of cutting rates sooner than thought as the absence of cost-push shocks would bring down inflation well below targets. In contrast, the BoE Chief Economist Huw Pill said that action is still needed in assessing inflation prospects and that the onus remains on ensuring enough policy tightening is delivered to see the job through.

Given that most European markets are closed in observance of Easter Monday, the aforementioned mixed fundamental backdrop is holding back traders from placing aggressive bullish bets around the GBP/USD pair amid relatively thin liquidity. Investors also seem reluctant and prefer to move to the sidelines ahead of the FOMC meeting minutes, due on Wednesday. This week's US economic docket also features the release of the latest consumer inflation figures and monthly retail sales data. This will play a key role in influencing the USD and provide a fresh directional impetus to the major.

Technical levels to watch

Economists at BBH offer a sneak peek at what to expect from the all-important United States Consumer Price Index (CPI)  and Producer Price Index (PPI) data due for release this week on Wednesday and Thursday respectively.

Key quotes

“Inflation data take center stage this week. March CPI will be reported Wednesday.” 

“Headline is expected at 0.2% m/m and 5.1% y/y vs. 0.4% m/m and 6.0% y/y in February.  Core is expected at 0.4% m/m and 5.6% y/y vs. 0.5% m/m and 5.5% y/y in February.”  

“Of note, the Cleveland Fed’s inflation nowcast model sees headline CPI at 0.30% m/m and 5.22% y/y and core CPI at 0.45% m/m and 5.66% y/y, both slightly above consensus.” 

“PPI will be reported Thursday.  Headline is expected at 0.0% m/m and 3.0% y/y vs. -0.1% m/m and 4.6% y/y in February.  Core is expected at 0.3% m/m and 3.5% y/y vs. 0.0% m/m and 4.4% y/y in February. “

Economists at ABN Amro noted in their latest client note that the” US Payrolls growth slowed to 236k in March, down from 326k in February, and continuing the broad cooling trend in the labour market of the past year or so.”

Additional quotes

“The unemployment rate declined one tenth, to 3.5% – close to its all-time low. Wage growth remained benign at 0.3% m/m (4.2% y/y), though we must add the caveat here that productivity has been very weak of late, meaning that unit labour cost growth has surged (meaning that the labour market still poses upside risks to inflation). The overall message is that the labour market is loosening, but remains exceptionally tight. “

“Although markets reacted strongly to the steep drop in the JOLTS job vacancies on Wednesday, we interpret this data with caution given that similarly large declines in the past were subsequently revised away. The tendency for the JOLTS data to be revised may reflect that the survey response rate has fallen to a very low level of c.30% (i.e. the data is likely not as reliable as it used to be).”

“A more gradual slowing in the labour market is visible in other data, including continuing jobless claims, and challenger job cut announcements (both of which have been rising but remain historically low).”

• USD/JPY gains traction for the third straight day amid a modest USD strength.
• The upbeat US NFP revives bets for more Fed rate hikes and underpins the buck.
• Sliding US bond yields cap gains for the USD and the pair amid geopolitical risks.

The USD/JPY pair scales higher for the third successive day on Monday and touched a four-day high, around the 132.80 region, albeit lacks follow-through. Spot prices trim a part of the intraday gains and trade around the 132.35 area during the early European session, up less than 0.15% for the day.

Reviving bets for further policy tightening by the Federal Reserve (Fed) push the US Dollar (USD) higher for the fourth straight day, which turns out to be a key factor acting as a tailwind for the USD/JPY pair. In fact, the markets are now pricing in a greater chance of a 25 bps lift-off at the next FOMC policy meeting in May and the bets were lifted by the mostly upbeat US employment details released on Friday. The intraday uptick, however, runs out to steam near the 132.80 region, warranting some caution for aggressive bullish traders.

Market participants still seem convinced that the Fed will cut rates in the second half of the year amid signs of slowing economic growth. This, along with a fresh leg down in the US Treasury bond yields, caps any meaningful upside for the buck. Apart from this, heightened US-China tensions over Taiwan drive some haven flows towards the Japanese Yen (JPY) and further contribute to keeping a lid on the USD/JPY pair. Traders also seem reluctant ahead of the new Bank of Japan (BoJ) Governor Kazuo Ueda's inauguration speech at 1030 GMT).

Moreover, most European markets are closed in observance of Easter Monday and relatively thin trading volumes might further hold back traders from placing fresh bets. The market focus, meanwhile, remains glued to the FOMC policy meeting minutes, due on Wednesday. This week's US economic docket also features the release of the latest consumer inflation figures and monthly retail sales data, which will play a key role in influencing the near-term USD price dynamics and determining the next leg of a directional move for the USD/JPY pair.

Technical levels to watch

• Gold price pares the first weekly gains in three, bounces off 200-EMA at the latest.
• China-inflicted risk aversion, hawkish Fed bets underpin US Dollar’s corrective bounce after four-week downtrend.
• XAU/USD bears remain cautious ahead of key support.
• Easter Monday holidays, anxiety ahead of US inflation, Fed Minutes add filters to Gold price.

Gold price (XAU/USD) trims intraday losses around $1,995 amid the Easter Monday holiday in major bourses. In doing so, the bullion bounces off the 200-bar Exponential Moving Average (EMA) but remains mildly offered on a day, which in turn teases sellers after the bullion marked the first weekly gains in three at the last.

That said, the China-linked risk-off mood joins the US Dollar’s rebound to exert downside pressure on the Gold price. However, the market’s latest inaction limits the XAU/USD moves of late. Recently, South Korea joined the US in defending Taiwan as Beijing marks a heavy show of military drills. Even so, the terms of tension are still inexplicable as the US signals the latest moves of sending arms help to Taipei as precautionary and resists taking major steps.

Elsewhere, Friday’s better-than-forecast prints of the US Nonfarm Payrolls (NFP) renew hawkish Fed bets and suggest a 0.25% rate hike by the US central bank versus previously expected inaction.

It should be noted, however, that the downbeat US Treasury bond yields and the overall weak US statistics prod the US Dollar bulls and allow the Gold buyers to remain hopeful ahead of the US Consumer Price Index (CPI) data and the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting Minutes.

While portraying the mood, the S&P 500 Futures print mild losses around 4,130, after a two-day uptrend, whereas the US 10-year and two-year Treasury bond yields remain pressured near 3.37% and 3.95% respectively. In doing so, the benchmark bond coupons extend the previous day’s losses and portray the market’s rush toward the risk-safety amid economic slowdown fears. Further, the US Dollar Index (DXY) prints mild gains around 102.20 while extending the last Tuesday’s rebound from a two-month low.

Moving on, Gold traders should pay attention to the geopolitical headlines for intraday directions while US inflation and Fed Minutes will be crucial for a clear guide afterward.

Gold price technical analysis

Gold price remains depressed as XAU/USD breaks the one-week-old ascending support line, now resistance, as well as the 50-bar Exponential Moving Average (EMA) surrounding $2,007, to lure Gold sellers.

Even so, the 200-EMA and previous resistance line from March 20, respectively near $1,990 and $1,982, can challenge the Gold price downside ahead of welcoming the bears.

In that case, an ascending support line from March 22, close to $1958, will be on the XAU/USD seller’s radar.

Meanwhile, recovery moves remain elusive unless crossing the 50-EMA hurdle of $2,007. Following that, the recent high near $2,035 and previous support line from April 03, now resistance around $2,040, can test the Gold buyers.

Should the precious metal remains firmer past $2,040, the previous yearly top surrounding $2,070 and the all-time high marked in 2020 around $2,075 will be in focus.

Gold price: Hourly chart

Trend: Further downside expected

• The US Dollar Index edges higher for the fourth straight day on Monday, though lacks follow-through.
• The upbeat US NFP report revives bets for additional Fed rate hikes and is seen underpinning the buck.
• Geopolitical tensions further benefit the safe-haven Greenback and remain supportive of the move up.
• Expectations that the Fed will cut rates during the second half of the year cap the upside for the USD.

The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, kicks off the new week on a positive note and builds on its recent bounce from the lowest level since early February touched last Wednesday. This marks the fourth successive day of a positive move for the buck, though lacks follow-through or bullish conviction amid the uncertainty over the Federal Reserve's (Fed) rate-hike path.

The mostly upbeat US monthly employment details released on Friday suggested that the US central bank may have to raise interest rates next month. In fact, the headline NFP showed that the US economy added 236K new jobs in March against market expectations for a reading of 240K. Furthermore, the jobless rate edged down to 3.5% from 3.6% the previous, while Average Hourly Earnings rose 0.3% during the reported month. The annual wage gains, meanwhile, slowed, though remain too high to be consistent with the Fed's 2% inflation target and support prospects for further policy tightening.

Apart from this, the risk of a further escalation in tensions between the US and China is seen as another factor benefitting the Greenback's relative safe-haven status. It is worth mentioning that China retaliated against Taiwan President Tsai Ing-wen’s US visit and carried out aggressive military drills around Taiwan on Monday. The de facto US embassy in Taiwan said on Sunday the US has sufficient resources and capabilities regionally to ensure peace and stability. This comes amid worries about a deeper global economic downturn, which continues to weigh on investors' sentiment and drives some haven flows.

Market participants, however, seem convinced that the Fed will cut rates in the second half of the year and the expectations were fueled by the recent US macro data, which has been pointing to slowing economic growth. This, in turn, might hold back the USD bulls from placing aggressive bets and cap the upside ahead of the FOMC meeting minutes, due on Wednesday. This week's US economic docket also features the release of the latest consumer inflation figures and monthly retail sales data, which if misses consensus estimates will take Fed rate-hike bets off the table and weigh on the USD.

Technical levels to watch

Here is what you need to know on Monday, April 10:

Following last Friday's quite trading, markets stay calm to start the week with most markets remaining closed on Easter Monday. In the second half of the day, US stock and bond markets will open at the usual time. February Wholesale Inventories will be the only data featured in the US economic docket and NY Fed President John Williams will be delivering a speech in the American trading hours.

On Friday, the US Bureau of Labor Statistics reported that Nonfarm Payrolls rose by 236,000 in March, slightly lower than the market expectation of 240,000. The Unemployment Rate edged lower to 3.5% from 3.6% in the same period and the Labor Force Participation Rate improved to 62.6% from 62.5%. Finally, annual wage inflation, as measured by the Average Hourly Earnings, declined to 4.2% from 4.6%.

Following the jobs report report, the benchmark 10-year US Treasury bond yield gained nearly 3% in the shortened session and snapped a seven-day losing streak. In turn, the US Dollar Index (DXY) registered modest daily gains. Early Monday, the DXY holds comfortably above 102.00 but the 10-year US yield stays in negative territory at around 3.35%. Meanwhile, US stock index futures trade mixed before Wall Street comes back from a long weekend.

Following Friday's pullback, EUR/USD trades within a very tight range at around 1.0900 in the European morning on Monday.

GBP/USD managed to close the previous week slightly above 1.2400 but struggled to gain traction early Monday.

USD/JPY edged higher during the Asian trading hours on Monday and was last seen trading in positive territory above 132.50. The data from Japan showed earlier in the day that the Consumer Confidence Index improved to 33.9 in March from 31.1 in February. 

Gold price opened with a bearish gap following the sharp rebound witnessed in US yields on Friday. XAU/USD was last seen moving up and down in a range slightly below $2,000.

Bitcoin posted modest gains on Sunday but continues to fluctuate within its 10-day-old range at around $28,000. Ethereum is having a difficult time gathering bullish momentum and staying below $1,900 despite having snapped a three-day losing streak on Sunday.

• EUR/USD remains depressed around intraday low, snaps three-week uptrend.
• Downside break of three-week-old ascending trend line, receding bullish bias of MACD favor sellers.
• Fortnight-long support line acts as additional check for Euro bears.
• RSI retreat, multiple hurdles above 1.1000 keeps EUR/USD sellers hopeful.

EUR/USD remains indecisive around 1.0920, recently bouncing off the intraday low to pare the latest losses amid early Monday.

In doing so, the Euro pair portrays a U-turn from the 10-DMA support while defending the previous week’s hesitance in breaking the key horizontal hurdle from late January, around 1.0930. Even so, the EUR/USD pair remains sidelined after positing a three-week uptrend in the last.

Apart from the Euro pair’s inability to cross the 1.0930 hurdle, the receding bullish bias of the MACD and the RSI (14) line’s retreat also suggest a pullback in the EUR/USD price.

However, a daily closing below the 10-DMA support of 1.0890 becomes necessary for the intraday sellers of the pair. Following that, an upward-sloping support line from March 24, near 1.0850, becomes the last defense of the EUR/USD bulls.

Meanwhile, a daily closing beyond 1.0930 isn’t an open invitation to the EUR/USD bulls as the previous support line from mid-March, around 1.1015 by the press time, precedes the yearly high marked in January around 1.1035, to challenge further upside of the major currency pair.

In a case where EUR/USD remains firmer past 1.1035, the late March 2022 high near 1.1185 will be in focus.

Overall, EUR/USD is well-set for a pullback but the Easter Monday holiday restricts the pair’s moves.

EUR/USD: Daily chart

Trend: Further downside expected

• USD/CAD is putting efforts to shift the business above 1.3520 amid anxiety ahead of US Inflation.
• Federal Reserve is likely to consider one more rate hike in May amid tight labor market conditions.
• Bank of Canada would keep rates steady as Canada’s inflation is softening meaningfully.
• USD/CAD is auctioning in a Rising Channel, however, the upside momentum looks weak.

USD/CAD is making efforts in shifting business above the immediate resistance of 1.3520 in the Asian session. The Loonie asset is gaining traction as investors are awaiting the release of the United States inflation figures and the interest rate decision by the Bank of Canada (BoC), which will release on Wednesday.

S&P500 futures have turned negative after surrendering opening gains as geopolitical tension between China and Taiwan has underpinned the risk aversion theme. Also, investors are cautionary for US equities as the quarterly result season will kick off sooner. 

Meanwhile, the US Dollar Index (DXY) is continuously refreshing day’s high as tight US labor market conditions have strengthened hopes of more rate hikes from the Federal Reserve (Fed). The USD Index has printed a high of 102.25. The US Treasury yields are showing a subdued performance despite rising odds of a hawkish Federal Reserve policy for May.

Federal Reserve to raise rates further as Unemployment Rate remains lower

Friday’s US Employment data has confirmed that higher rates by the Federal Reserve and tight credit conditions by commercial banks after the collapse of Silicon Valley Bank (SVB) and Signature Bank had a minimal impact on the US labor market. In March, the US economy added fresh 236K, marginally lower than the consensus of 240K but significantly lower than the former release of 326K. The Unemployment Rate dropped further to 3.5% from the consensus and the prior release of 3.6%.

Less impact of higher rates on the US labor market has strengthened the need for more hikes to arrest the stubborn US inflation. According to money market expectations, 64% of investors are supporting more rate hikes from the Federal Reserve.

US Inflation to provide clarity on Federal Reserve’s interest rate guidance

After the US Nonfarm Payrolls (NFP) data, investors are sticking to Consumer Price Index (CPI) data, which will provide extensive clarity on interest rate guidance. As per the consensus, the headline inflation will soften to 5.2% from the former release of 6.0%. Also, monthly headline CPI would decelerate to 0.3% from 0.4% reported earlier. Oil prices remained lower in March and its effect is expected to get visible in inflationary pressures.

However, the upward-rising US labor cost index due to a shortage of labor is keeping demand for core goods resilient. This might force Federal Reserve chair Jerome Powell to put the last nail in the coffin by pushing rates above 5% to intermediate pivotal.

Bank of Canada to keep rates unchanged

This week, the Canadian Dollar will dance to the tunes of the interest rate decision by the Bank of Canada. A continuation of a neutral policy stance is expected from Bank of Canada Governor Tiff Macklem as Canada’s inflation is softening consecutively. The inflation rate has already decelerated to 5.2% in February as the Bank of Canada monetary policy is restricted enough to tame inflationary pressures.

Last week, Canada’s employment data remained extremely tight. Demand for labor crossed expectations significantly and the Unemployment Rate was trimmed further to 5%. This could put some pressure on the Bank of Canada for reconsidering policy stance.

USD/CAD technical outlook

USD/CAD is auctioning in a Rising Channel chart pattern on an hourly scale in which corrections are considered buying opportunities by the market participants. However, the upside momentum looks weak amid an absence of any perpendicular move by the US Dollar.

The Relative Strength Index (RSI) (14) has been failing in climbing above the 60.00 level decisively, indicating missing upside momentum in the Loonie asset.

However, the 20-period Exponential Moving Average (EMA) at 1.3509 is continuously providing cushion to the US Dollar.

• WTI remains sidelined inside a four-day-old trading range, retreats of late.
• Fears emanating from OPEC+ supply cuts, geopolitical fears underpin Oil price strength.
• US Dollar traces recently firmer odds of Fed’s 0.25% rate hike in May after upbeat US NFP.
• Risk catalysts, US inflation and Fed Minutes eyed for clear directions.

WTI crude oil buyers struggle to keep the reins around $80.70 during early Monday as risk-aversion joins hawkish Fed bets to underpin the US Dollar rebound. However, challenges to Oil supplies, mainly emanating from China and OPEC+, seem to keep the black gold buyers hopeful.

US Dollar Index (DXY) snaps a four-day downtrend around 102.25 even as the US Treasury bond yields fail to recover amid recession woes. That said, the US 10-year and two-year Treasury bond yields remain pressured near 3.37% and 3.95% respectively. In doing so, the benchmark bond coupons extend the previous day’s losses and portray the market’s rush toward the risk-safety amid economic slowdown fears.

That said, the recently downbeat US data renew fears of a recession in the world’s largest economy and challenge the energy optimists. However, the upbeat prints of the US Nonfarm Payrolls (NFP) allowed the Fed hawks to return to the table and new calls for the 0.25% rate hike in May. The same puts a floor under the US Dollar prices and prods WTI crude oil buyers.

On the other hand, geopolitical fears surrounding China, mainly after the dragon nation’s military drills near Taiwan, join the last week’s surprise OPEC+ output cut to keep the Oil buyers hopeful.

Elsewhere, China’s readiness to defend the global economy via strong monetary and fiscal easing at home also allows the Oil buyers to remain hopeful amid optimism at the world’s biggest Oil consumers.

Moving on, the Easter Monday holidays in spot markets may restrict Oil moves but the bulls appear to run out of fuel and hence US inflation and Fed Minutes will be watched carefully for the signals of a pullback.

Technical analysis

Despite the latest inaction, the WTI crude oil remains firmer past the 100-DMA support near $76.80. However, a downward-sloping resistance line from December 2022, around $81.70, appears a tough nut to crack for the WTI crude oil buyers.

• USD/CHF picks up bids to refresh intraday high, extend previous week’s rebound from 22-month low.
• Bullish MACD signals allow USD/CHF to consolidate recent losses but March’s low guards immediate upside.
• Multiple resistance lines, 100-SMA stand tall to challenge USD/CHF bulls.
• Sellers need validation from 0.9035 to aim for fresh multi-month low.

USD/CHF renews its intraday high near 0.9065 during early Easter Monday in Europe. In doing so, the Swiss Franc (CHF) pair extends the previous day’s recovery from a 22-month low while approaching a one-month-old support-turned-resistance surrounding 0.9075.

It’s worth noting that the bullish MACD signals join the corrective bounce off the multi-day low to lure USD/CHF buyers as they approach the previous support near 0.9075.

Even if the quote manages to stay firmer past 0.9075, downward-sloping resistance lines from March 26 and 15, respectively near 0.9095 and 0.9145, can check the USD/CHF buyers.

Even so, the Swiss currency pair buyers need to portray a successful upside break of the 100-bar Simple Moving Average (SMA), around 0.9160, to please the USD/CHF buyers.

Following that, 0.9225 and a late March swing high of around 0.9345 will be in focus.

On the flip side, multiple lows around 0.9035-30 can test the USD/CHF bears before recalling them to the driver’s seat. However, the 0.9000 psychological magnet may challenge the sellers afterward.

In a case where USD/CHF remains bearish past 0.9000, June 2021 low near 0.8925 may lure the sellers.

USD/CHF: Four-hour chart

Trend: Limited recovery expected

• USD/MXN is eyeing more weakness below 18.10 as USD Index has witnessed exhaustion in the upside momentum.
• The USD Index is struggling to expand gains further as investors are ignoring volatility ahead of US inflation data.
• USD/MXN is expected to continue further downside amid Darvas Box formation.

The USD/MXN pair has gauged an intermediate cushion after a sheer downside around 18.10 in the Asian session. The asset is hovering near the aforementioned support but is likely to face selling pressure as the US Dollar Index (DXY) has witnessed exhaustion in its upside journey.

The USD Index is struggling to expand gains further as investors are ignoring volatility ahead of US inflation data. Topsy-turvy moves are expected from the USD Index as the US inflation is expected to display some surprises.

Investors are divided about US inflation figures as one school of thought is favoring further softening of inflation as higher rates might have dampened retail demand, While, others are expecting a surprise rebound as labor market conditions are extremely solid.

On an hourly scale, USD/MXN is expected to continue the downside move amid the trend-following characteristic of Darvas Box chart formation. The formation of Darvas Box indicates an inventory adjustment phase between institutional investors and retail participants. Currently, the Darvas Box is forming in a range of 18.10-18.15. Horizontal support is placed from April 03 low at 17.96.

The 20-period Exponential Moving Average (EMA) at 18.15 is acting as a barricade for the US Dollar bulls.

Adding to that, the Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00 range, indicating more weakness ahead.

Going forward, a decisive break below April 07 low at 18.10 would expose the asset to the horizontal support plotted from April 03 low at 17.96. Further crack below the latter would expose the asset to a fresh five-year low at 17.75.

Alternatively, a break above March 24 high at 18.78 will expose the asset to March 17 high at 18.95 and March 20 high at 19.23.

USD/MXN hourly chart

• AUD/USD remains sidelined around intraday low amid Easter Monday holiday.
• China’s military drills around Taiwan propelled geopolitical woes early in Asia.
• Absence of escalation in military strikes, off in multiple markets tame Aussie pair’s moves.
• Cautious mood before Aussie employment, US inflation, Fed Minutes weigh on AUD/USD but more clues needed for clear directions.

AUD/USD sticks to minor losses around 0.6670, despite recently bouncing off the intraday low, as bears lack influencers amid the Easter Monday holiday. In doing so, the Aussie pair fails to justify the escalating geopolitical tension between the US and China.

China’s retaliation to Taiwan President Tsai Ing-wen’s US visit, by holding aggressive military drills near Taiwan Strait, triggered a risk-off mood during early Monday. However, the US refrains from speaking much as Reuters reports that the de facto US embassy in Taiwan said on Sunday the United States was monitoring China's drills around Taiwan closely and is ‘comfortable and confident’ it has sufficient resources and capabilities regionally to ensure peace and stability. Apart from that, there is total silence from the US on this matter and hence the risk aversion seems cooling down of late, which in turn prods AUD/USD bears.

Even so, the Reserve Bank of Australia’s (RBA) pause on its rate hike trajectory joins downbeat Aussie inflation and Retail Sales data to keep AUD/USD sellers hopeful. On the same line could be the recently firmer US Nonfarm Payrolls (NFP) that allowed the Fed hawks to renew bets on the US central bank’s May-month rate hike.

As per the latest data from the US Bureau of Labor Statistics (BLS), the Nonfarm Payrolls (NFP) rose by 236K in March, the lowest since January 2021 (considering the revisions), versus 240K expected and 326K prior. Further, the Unemployment Rate eased to 3.5% versus 3.6% prior while the Labor Force Participation Rate improved to 62.6% from 62.5%. Finally, annual wage inflation, per the Average Hourly Earnings, dropped to 4.2% from 4.6%, versus market forecasts of 4.3%. 

It should be noted that the escalating chatters surrounding the global recession jostles with China’s belief to anchor the macro waves with its ultra-easy monetary policy and fiscal efforts seem to test the AUD/USD pair traders.

Moving on, AUD/USD traders should pay attention to Australian employment numbers for clear directions. However, the US Consumer Price Index (CPI) data and the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting Minutes will be more important for clear directions. Should the US inflation remains firmer and the Fed Minutes keep defending hawkish policy moves, the odds of witnessing the Aussie pair’s further downside can’t be ruled out.

Technical analysis

A clear downside break of the one-month-old ascending support line, now immediate resistance around 0.6690, keeps AUD/USD bears hopeful. However, Friday’s Doji candlestick challenges the Aussie pair sellers unless the quote trades below the previous day’s low of 0.6641.

• Gold price has stretched its downside to near $1,990.00 amid steep recovery in the USD Index.
• Investors are anticipating a rebound in US inflation figures amid solid labor market conditions.
• Gold price is declining towards the upward-sloping trendline plotted at $1,885.77.

Gold price (XAU/USD) has extended its downside to near $1,990.00 as the US Dollar Index (DXY) has refreshed the day’s high amid soaring anxiety among the market participants ahead of the release of the United States inflation data. The USD Index has printed a fresh high of 102.23 as investors are anticipating a rebound in US inflation figures amid solid labor market conditions.

Meanwhile, S&P500 futures have extended their losses on hopes that the Federal Reserve (Fed) is looking to hike rates further to arrest persistent inflation, portraying a decline in the risk appetite of the market participants. Fed chair Jerome Powell is expected to push rates above 5% as the Unemployment Rate has further dropped. This might continue to force firms to offer higher earnings for acquiring fresh talent.

Contrary to the USD Index, the US Treasury yields have faced pressure. The 10-year US Treasury yields have dropped to near 3.37%.

For further guidance, Wednesday’s US inflation data will be keenly watched. Moderation in the headline Consumer Price Index (CPI) is highly expected as gas prices remained lower in March due to weak oil prices. The core inflation that excludes oil and gas prices is expected to show a surprise upside as average earnings by households are highly solid.

Gold technical analysis

Gold price is declining towards the upward-sloping trendline plotted from March 15 low at $1,885.77 on an hourly scale. The precious metal has surrendered the psychological support of $2,000.00.

A bear cross, represented by the 20-and 50-period Exponential Moving Averages (EMAs) at $2,011.43, indicates more weakness ahead.

Meanwhile, the Relative Strength Index (RSI) (14) has slipped into the bearish range of 20.00-40.00, which conveys that the downside momentum is in action.

Gold hourly chart

• GBP/USD takes offers to refresh intraday low, extend the previous week’s pullback from 10-month high.
• Risk aversion, hawkish Fed bets underpins US Dollar rebound amid Easter Monday holiday.
• BoE Governor Bailey’s speech will be eyed closely amid receding hawkish bias from major central banks.
• US inflation, Fed Minutes and UK politics over Brexit will also be crucial to watch for clear directions.

GBP/USD takes offers to refresh the intraday low near 1.2400 during early Easter Monday morning in London. In doing so, the Cable pair drops for the fourth consecutive day as the US Dollar recovers amid the risk-off mood. Adding strength to the pullback moves could be the hawkish hopes from the US Federal Reserve (Fed), versus recent doubts about the Bank of England’s (BoE) next move.

That said, fears emanating from China, mainly due to the dragon nation’s military drills near the Taiwan Strait, seem to underpin the US Dollar’s rebound. Taiwan President Tsai Ing-wen’s US visit triggered a fresh bout of US-China woes as Beijing conducts strong military drills near Taiwan Strait. “China's military simulated precision strikes against Taiwan in a second day of drills around the island on Sunday, with the island's defense ministry reporting multiple air force sorties and that it was monitoring China's missile forces,” reported Reuters.

On the other hand, recently firmer US Nonfarm Payrolls (NFP) allowed the Fed hawks to renew bets on the US central bank’s May-month rate hike. That said, the US Bureau of Labor Statistics (BLS) revealed that Nonfarm Payrolls (NFP) rose by 236K in March, the lowest since January 2021 (considering the revisions), versus 240K expected and 326K prior. Further, the Unemployment Rate eased to 3.5% versus 3.6% prior while the Labor Force Participation Rate improved to 62.6% from 62.5%. Finally, annual wage inflation, per the Average Hourly Earnings, dropped to 4.2% from 4.6%, versus market forecasts of 4.3%. 

With this, the CME’s FedWatch Tool suggests 66% odds of the 0.25% rate hike in May, versus 55% before the US jobs report.

On the other hand, the Bank of England (BoE) officials appear less hawkish and the rate suggests a pause in the rate hike trajectory even as the UK inflation remains the cause of concern.

Against this backdrop, the S&P 500 Futures remains directionless around 4,130, after a two-day uptrend, whereas the US 10-year and two-year Treasury bond yields remain pressured near 3.37% and 3.95% respectively. In doing so, the benchmark bond coupons extend the previous day’s losses and portray the market’s rush toward the risk-safety amid economic slowdown fears.

Looking forward, the Easter Monday holiday can restrict the GBP/USD pair’s intraday moves. However, this week’s US Consumer Price Index (CPI) data and the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting Minutes will be crucial for near-term directions as riskier assets seem losing their charm.

Apart from that, UK Prime Minister Rishi Sunak’s meeting with US President Joe Biden, in Northern Ireland, will join the debate on whether, when and how the ditching of European Union (EU) laws will start, in the UK’s House of Lords, to entertain the GBP/USD traders. It’s worth noting that the recently British-India ties and London’s ability to strike deals with multiple Asia-Pacific nations push back recession woes for the UK. However, the Bank of England (BoE) seems hesitant to convey the pessimism and hence Governor Bailey’s speech, up for publishing on Wednesday, will be eyed for clear directions.

Technical analysis

Unless breaking a three-week-old ascending support line, around 1.2375 by the press time, becomes necessary for the GBP/USD bears to stay off the table.

• USD/INR is aiming to defend its immediate support of 81.70 as RBI has yet not reached to pivot rate.
• Mounting China-Taiwan tensions have triggered the risk-off market mood.
• Further movement in the USD Index is likely to be guided by the US inflation data.

The USD/INR pair has shown a minor recovery from 81.75 in the Tokyo session. The recovery move in the major is backed by a responsive move in the US Dollar Index (DXY). The USD Index found attention from responsive buyers as China-Taiwan tensions get escalated after the Chinese military surround Taiwan Island with aircraft and ships. Also, the Chinese Defence Ministry is quickly drilling around Taiwan, strengthening the risk-off mood.

S&P500 futures are showing nominal losses after surrendering gains generated in the opening session as investors are getting precautionary ahead of the quarterly earnings season. Also, rising fears of a recession in the United States are impacting equities. The USD Index rebounded firmly to near 102.20 but is struggling in extending recovery further.

Meanwhile, the alpha generated on US government bonds has dropped despite mounting expectations of consecutive 25 basis points (bps) interest rate hike from the Federal Reserve (Fed). The 10-year US Treasury yields have dropped sharply to near 3.37%.

Further movement in the USD Index is likely to be guided by the US inflation data, which will release on Wednesday. The investing community is anticipating a rebound in core inflation figures as a higher labor cost index due to the tight labor market is making overall demand resilient.

On the Indian Rupee front, Reserve Bank of India (RBI) Governor Shaktikanta Das kept the interest rate policy unchanged for the first time since May 2022. RBI Governor cited contagion fears from global banking turmoil as a major reason for keeping rates steady. He further added that the central bank reached its pivotal rate yet and a steady policy is a cautionary move to maintain economic prospects.

Going forward, Indian investors will keep an eye on oil prices, which have been sideways for a week. The oil price is auctioning in a bounded territory after a gap-up move inspired by the surprise announcement of production cuts from OPEC+. It is worth noting that India is one of the leading importers of oil in the world and higher oil prices would impact the Indian Rupee.

• EUR/USD has slipped below 1.0900 amid a risk-off market mood due to geopolitical tensions.
• Mounting expectations for a higher US core CPI are supporting the USD Index.
• Contracting Eurozone Retail Sales would be insufficient to back a neutral stance for the upcoming ECB monetary policy meeting.

The EUR/USD pair has surrendered the round-level support of 1.0900 in the Asian session. The major currency pair has attracted significant offers as investors are getting anxious ahead of the release of the United States Inflation data. The release of the US inflation is expected to provide clear guidance about interest rates from the Federal Reserve (Fed).

S&P500 futures have shifted into a negative trajectory amid geopolitical tensions. Grudges between China and Taiwan have deepened further and the Chinese military has enforced 58 aircrafts surrounding Taiwan Island, as reported by the Taiwan ministry. A weak appetite for risk-perceived assets is indicating a risk aversion theme in the current scenario.

The US Dollar Index (DXY) has refreshed its day’s high at 102.21 as investors’ expectations are highly skewed toward hawkish Fed policy. As per the CME Fedwatch tool, 66% of bets are in favor of a 25 basis point (bp) rate hike from Fed chair Jerome Powell.

Going forward, Wednesday’s US Inflation data will be keenly watched. Headline inflation is expected to see further softening as oil prices have remained lower in March, however, the core Consumer Price Index (CPI) that strips off of oil and food prices would rebound amid higher labor cost index data. Tight labor market conditions in the US economy left no other option for firms other than offering higher payouts to retain talent. Therefore, households were handed higher funds for disposal.

On the Eurozone front, Retail Sales data will be keenly watched. Monthly Retail Sales (March) are expected to contract by 0.8% vs. an expansion of 0.3% recorded in February. And annual Retail Sales would contract further to 3.5% from a prior contraction of 2.3%.

This might delight the European Central Bank (ECB) but is not sufficient to back a neutral stance for THE upcoming monetary policy meeting.

• USD/JPY prints three-day uptrend as it pokes one-month-old descending resistance line.
• Clear upside break of 21-DMA, firmer oscillators suggest the Yen pair’s further upside.
• Bearish need validation from 12-week-old ascending support line to retake control.

USD/JPY buyers occupy the driver’s seat for the third consecutive day as they pierce a one-month-old descending resistance line near 132.65 during early Monday.

In doing so, the Yen pair justifies the upside break of the 21-DMA, the first in a monthly, while also taking clues from the upbeat oscillators. That said, the MACD portrays the strongest bullish signals in a month while the RSI (14) also grinds higher past the 50 level, suggesting a gradual run-up of the pair.

It’s worth noting, however, that the 50-DMA hurdle, around 133.20, appears a short-term key challenge for the USD/JPY buyers to pass if they wish to keep the reins.

Following that, a run-up towards a seven-week-old horizontal resistance area around 135.20, can’t be ruled out.

In a case where the USD/JPY pair remains firmer past 135.20, the Year-To-Date (YTD) high of 137.91 should lure the bulls before highlighting the 140.00 psychological magnet.

On the contrary, the Yen pair’s pullback remains elusive unless the quote stays past an upward-sloping support line from January 16, around 131.00 by the press time.

Even if the USD/JPY bears manage to conquer the 131.00 trend line support, the previous monthly low of around 129.65 can act as an extra filter towards the south ahead of directing the moves to the early 2023 bottom of 127.21.

USD/JPY: Daily chart

Trend: Further upside expected

Commenting on the Bank of Japan’s (BoJ) policy outlook under the new Governorship this Monday, Japanese Cabinet Secretary Hirokazu Matsuno noted that “I expect the Bank of Japan will implement appropriate monetary policy in collaboration with the government.”

Further, when asked about China's military drills around Taiwan, Matsuno said that “we are keeping a close eye on the situation.”

The new BoJ Governor Kazuo Ueda is likely to hold his inaugural press conference on Monday at 10:15 GMT.

Related reads

• US Dollar Index: DXY licks its wounds near 102.00 on Easter Monday, US inflation, FOMC Minutes eyed

• Natural Gas price prints mild gains after declining to the lowest levels since August 2020 the previous day.
• Fears of supply crunch allow XNG/USD bears to take a breather at multi-month low.
• US Dollar rebound, expectations of warmer weather in Europe challenge gas buyers.
• Market sentiment, inflation data from China and US will be important for fresh impulse.

Natural Gas (XNG/USD) picks up bids to consolidate recent losses around $2.17, up 0.65% intraday during early Monday. In doing so, the energy source recover from the lowest levels in 20 months, marked the previous day, amid supply crunch fears emanating from China and Russia.

Taiwan President Tsai Ing-wen’s US visit triggered a fresh bout of US-China woes as Beijing conducts strong military drills near Taiwan Strait. The same could be considered as a risk-negative and a major challenge for Gas transportation, which in turn allows the XNG/USD to lick its wounds near the lowest levels since August 2020. “China's military simulated precision strikes against Taiwan in a second day of drills around the island on Sunday, with the island's defense ministry reporting multiple air force sorties and that it was monitoring China's missile forces,” reported Reuters.

On the other hand, the four-week downward trajectory by the US Dollar and chatters surrounding the Federal Reserve’s (Fed) rate cut in late 2023 also seem to underpin the corrective bounce of the quote, due to its inverse relations with the USD.

Furthermore, the beginning of the summer traveling season in Europe and Russia’s readiness to amplify geopolitical concerns about Ukraine, via using nuclear weapons in the multi-month-old war with Kyiv, also favor the XNG/USD buyers.

However, fears of downbeat winter in the West join Russia’s failure to capitalize on its gas monopoly to weigh on the Natural Gas price. On the same line could be the recession fears, mainly backed by the recent downside US data.

That said, Friday’s upbeat prints of the US Nonfarm Payrolls (NFP) bolster hawkish Fed bets. With this, the CME’s FedWatch Tool suggests 69% odds of the 0.25% rate hike in May, versus 55% before the US jobs report.

While portraying the mood, S&P 500 Futures print mild losses around 4,132 while snapping a two-day uptrend whereas the US 10-year and two-year Treasury bond yields remain pressured near 3.37% and 3.95% respectively. In doing so, the benchmark bond coupons extend the previous day’s losses and portray the market’s rush toward the risk-safety amid economic slowdown fears. Further, the US Dollar Index (DXY) licks its wounds around a two-month low while the WTI crude oil rises to $80.80 by the press time.

Looking forward, the Easter Monday holiday can restrict the market’s intraday moves. However, updates from the US Consumer Price Index (CPI) data and the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting Minutes will be crucial for near-term directions as riskier assets seem losing their charm. It’s worth mentioning that the start of earnings season will also be important for traders to watch amid recession woes.

Technical analysis

Bears remain in the driver's seat targeting $2.00 unless the quote trades successfully beyond $2.40.

• USD/CAD struggles to defend the first daily loss in five inside a bearish chart formation.
• Sustained trading beyond 50-SMA, firmer oscillators prod bears.
• 200-SMA appears crucial hurdle for Loonie pair buyers.

USD/CAD picks up bids to pare intraday losses around 1.3510, after snapping four-day uptrend earlier in Asia. In doing so, the Loonie pair bounces off the 50-bar Simple Moving Average (SMA) but stays within a two-week-old bear flag chart formation.

That said, the bullish MACD signals and the firmer RSI (14), not overbought, suggest the USD/CAD pair’s further upside towards challenging the stated bearish chart pattern, by poking the flag’s top line of near 1.3545 by the press time.

However, the quote’s further upside hinges on its ability to stay beyond 1.3545, as well as successful trading beyond the 200-SMA resistance of 1.3635.

In that case, the USD/CAD bulls can aim for the late September highs of around 1.3800 before targeting the previous monthly peak of 1.3861.

Meanwhile, the Loonie pair’s downside break of the 50-SMA, around 1.3500 by the press time, could recall the bears. Though, the sellers must conquer the 1.3485 key support, comprising the lower line of the stated flag, to retake control.

Following that, the latest bottom surrounding 1.3400 may act as an intermediate halt during the theoretical fall targeting 1.3100.

It should be noted that the lows marked in February, close to 1.3260, may act as an extra filter towards the south.

USD/CAD: Four-hour chart

Trend: Limited upside expected

• Market sentiment sours China-induced fears even as Easter Monday holiday restricts momentum.
• S&P 500 Futures snap two-day recovery, yields defend previous weekly loss.
• Recession woes, central bank bets and inflation data are important for near-term directions.

Risk appetite remains unclear as the thin presence of traders due to the Easter Monday holiday joins the risk-negative headlines from China, as well as the cautious mood ahead of the key US data/events.

Taiwan President Tsai Ing-wen’s US visit triggered a fresh bout of US-China woes as Beijing conducts strong military drills near Taiwan Strait. “China's military simulated precision strikes against Taiwan in a second day of drills around the island on Sunday, with the island's defense ministry reporting multiple air force sorties and that it was monitoring China's missile forces,” reported Reuters.

It’s worth noting that Russia and North Korea’s warnings to use nuclear weapons are extra catalysts contributing to the risk-off mood.

On the same line are fears of global recession, inflicted by the US, amid downbeat US data and easing global hawkish talks.

Friday’s mixed US employment report, despite firmer Nonfarm Payrolls (NFP), failed to resettle the market’s risk-on mood even if the Fed bets improved and now suggest a 0.25% rate hike in May. The reason could be linked to the market expectations suggesting a rate cut in late 2023, per the Fed Fund Futures.

Elsewhere, central bankers from Australia and Canada have recently announced a pause in their rate hikes and favored economic woes.

Amid these plays, S&P 500 Futures print mild losses around 4,132 while snapping a two-day uptrend whereas the US 10-year and two-year Treasury bond yields remain pressured near 3.37% and 3.95% respectively. In doing so, the benchmark bond coupons extend the previous day’s losses and portray the market’s rush toward the risk-safety amid economic slowdown fears.

It should be noted that the US Dollar Index (DXY) licks its wounds around a two-month low while the WTI crude oil rises to $80.80 by the press time. Further, Gold price slides below $2,000 as traders pare recent gains at the 13-month high.

Moving ahead, the Easter Monday holiday can restrict the market’s intraday moves. However, updates from the US Consumer Price Index (CPI) data and the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting Minutes will be crucial for near-term directions as riskier assets seem losing their charm. It’s worth mentioning that the start of earnings season will also be important for traders to watch amid recession woes.

Also read: Forex Today: After NFP, attention turns to US inflation and global growth concerns

• GBP/USD has dropped below 1.2420 again amid a decent recovery in the USD Index.
• The USD Index has been backed by China-Taiwan tensions and rising hopes of one more rate hike from the Fed.
• S&P500 futures have turned negative as investors are anxious about the quarterly earnings season.

The GBP/USD pair has surrendered its entire gains generated in the early Asian session. The Cable has dropped back below 1.2420 as the US Dollar index (DXY) has extended its recovery to near 102.15. The USD Index has been backed by China-Taiwan tensions and rising hopes of one more rate hike from the Federal Reserve (Fed).

Meanwhile, S&P500 futures have turned negative after surrendering their entire gains as investors are confident about the recession in the United States economy. Also, investors are anxious about the initial quarterly earnings season of CY2023. Negative market sentiment has trimmed the appetite for risk-perceived assets. The return offered on 10-year US Treasury bonds has dropped below 3.38%.

Deepening China-Taiwan tensions after Taiwan received support from the US administration has triggered the risk-off mood. Taiwan Ministry has reported 58 Chinese aircrafts encircling Taiwan Island.

Friday’s sluggish US Nonfarm Payrolls (NFP) data and tight Unemployment Rate have backed one more rate hike from the Fed. Apart from that, monthly appreciation in Average Hourly Earnings has confirmed that households would remain equipped with higher funds for disposal, which might keep inflation elevated.

For detailed guidance, US Inflation data will be keenly watched, which is scheduled for Friday. According to the estimates, the headline Consumer Price Index (CPI) will decelerate to 5.2% from the former release of 6.0%. While the core CPI will inflate further to 5.6% from the prior release of 5.5%.

On the Pound Sterling front, United Kingdom markets will remain closed on account of Easter Monday. This week, Like for Like Sales data by the British Retail Consortium (BRC) will remain in focus. Food inflation is on an escalation spree, which could impact heavily on the pocket of UK households ahead. Also, a shortage of labor and a fresh jump in the oil price could pump UK inflation further.

• NZD/USD renews intraday low, extends previous week’s pullback from two-month high.
• Successful break of one-month-old ascending trend line, clear U-turn from 0.6385-90 resistance confluence favor sellers.
• Looming bear cross on MACD, steady RSI (14) adds strength to downside bias.

NZD/USD takes offers to refresh intraday low near 0.6240 during early Monday. In doing so, the Kiwi pair defends the previous week’s downward trajectory from a two-month high while breaking an upward-sloping support line from March, now immediate resistance, amid the Easter Monday holiday.

Not only the trend line break but a U-turn from the two-month-old horizontal resistance area and bearish MACD signals, as well as the steady RSI (14) line, also favor the NZD/USD sellers.

With this, the Kiwi pair is all set to attack the 0.6200 round figure. However, the 200-DMA hurdle of around 0.6160 can challenge the bears afterward.

Following that, the Year-To-Date (YTD) low marked in March around 0.6080 and the 0.6000 psychological magnet can lure the NZD/USD sellers during the pair’s further downside.

On the contrary, recovery moves need to cross the support-turned-resistance line, around 0.6260 at the latest, to convince intraday buyers of the NZD/USD pair.

Even so, the 50% and 61.8% Fibonacci retracement level of the pair’s February-March fall, around 0.6310 and 0.6365 in that order, can challenge the bulls.

It’s worth noting that the NZD/USD upside remains elusive unless the quote stays successfully beyond the two-month-old horizontal resistance area surrounding 0.6385-90.

NZD/USD: Daily chart

Trend: Further downside expected

People’s Bank of China (PBOC) set the USD/CNY central rate at 6.8764 on Monday, versus Friday's fix of 6.8838 and market expectations of 6.8739. It's worth noting that the USD/CNY closed near 6.8676 the previous day.

In addition to the USD/CNY fix, the PBOC also released data for the Open Market Operations (OMO) that suggest the Chinese central bank injects a net of 16 billion Yuan on the day, per Reuters calculations.

Further details of the PBOC update suggests that the Chinese central bank held 7-day Repo Rate unchanged at 2.0% at Monday's fix.

About the fix

China maintains strict control of the yuan’s rate on the mainland.

The onshore yuan (CNY) differs from the offshore one (CNH) in trading restrictions, this last one is not as tightly controlled.

Each morning, the People’s Bank of China (PBOC) sets a so-called daily midpoint fix, based on the yuan’s previous day's closing level and quotations taken from the inter-bank dealer.

• Oil price is auctioning in a bounded range amid an absence of a potential trigger.
• Bearish bets for the oil price were accelerating as investors are worried about oil demand due to escalating global recession fears.
• The USD Index has stretched its recovery to near 102.15 amid soaring expectations of one more rate hike from the Fed.

West Texas Intermediate (WTI), futures on NYMEX, have dropped after failing to sustain above $81.00 in the Tokyo session. The oil price is confined in a narrow range of $79.00-81.80 from the past week after the announcement of surprise production cuts by OPEC+ to provide stability in black gold.

Bearish bets for the oil price were accelerating as investors are worried about oil demand due to escalating fears of global recession amid policy-tightening by central banks.

The US Dollar Index (DXY) has stretched its recovery to near 102.15 amid soaring expectations of one more rate hike from the Federal Reserve (Fed). Going forward, the release of the United States Inflation data will provide more clarity. As per the consensus, the headline Consumer Price Index (CPI) will decelerate to 5.2% from the former release of 6.0%. Contrary, the core CPI will inflate further to 5.6% from the prior release of 5.5%.

The oil price is consolidating in a narrow range of $79.00-81.80 near the horizontal resistance plotted from March 07 high around $81.00 on a two-hour scale. The 20-period Exponential Moving Average (EMA) at $80.53 is overlapping the oil price, indicating rangebound moves.

Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range, which conveys that investors are awaiting a potential trigger.

Should the oil price break above April 04 high near $81.80, bulls will drive the asset towards December 01 high at $83.30 followed by October 21 high at $85.66.

On the flip side, a downside move below March 31 low at $73.31 would drag the asset toward March 23 high at $71.69. A break below the latter would further drag the oil price toward March 27 low at $69.18.

WTI two-hour chart

• Gold price struggles to defend the first positive weekly closing in three, mildly offered of late.
• US Dollar weakness, downbeat United States statistics and recession woes underpin XAU/USD run-up.
• Holidays in multiple markets can portray softer start of the key week comprising US inflation, Federal Reserve Minutes.

Gold price (XAU/USD) extends the previous pullback from a 13-month high even as the Easter Monday holiday restricts the market moves. In doing so, the precious metal takes clues from the geopolitical challenges to the market sentiment. Also allowing the XAU/USD bulls to take a breather, after posting the first weekly gain in three, is the cautious mood ahead of this week’s top-tier data and events, namely the United States Consumer Price Index (CPI) and the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting Minutes.

It’s worth noting that the fears of recession joined downbeat US data to allow the Gold price to refresh a multi-month high the previous week. However, firmer US employment numbers and the following increase in the Federal Reserve (Fed) hawkish bets prodded the bullion afterward.

Gold price rises on softer US Dollar

Gold price cheers downbeat US Dollar performance as the greenback’s gauge versus six major currencies dropped for the fourth consecutive week in the last while the XAU/USD prints the first weekly gain in three.

While tracing the US Dollar weakness, as well as the Gold price run-up, recently downbeat United States data and receding hawkish bias for the Federal Reserve (Fed) gain major attention.

That said, the US Bureau of Labor Statistics (BLS) revealed that Nonfarm Payrolls (NFP) rose by 236K in March, the lowest since January 2021 (considering the revisions), versus 240K expected and 326K prior. Further, the Unemployment Rate eased to 3.5% versus 3.6% prior while the Labor Force Participation Rate improved to 62.6% from 62.5%. Finally, annual wage inflation, per the Average Hourly Earnings, dropped to 4.2% from 4.6%, versus market forecasts of 4.3%. Previously, US JOLTS Job Openings dropped to the 19-month low in February while the ADP Employment Change for March also disappointed markets with 145K figures. Further, the US ISM Services PMI for March also amplified pessimism as it dropped to 51.2 versus 54.5 expected and 55.1 prior.

The downbeat US data also propels fears of a recession in the world’s largest economy and weigh on the US Dollar, as well as fuels the Gold price. As per the latest research, the Federal Reserve’s (Fed) preferred gauge of economic health backed the recession woes, via bond market clues. Reuters said, “Research from the Fed has argued that the ‘near-term forward spread’ comparing the forward rate on Treasury bills 18 months from now with the current yield on a three-month Treasury bill was the most reliable bond market signal of an imminent economic contraction.”

With the downbeat US data and recession woes, the Federal Reserve (Fed) officials also surrender previously hawkish bias and allow the Gold price to remain firmer. As a result, market players’ bets on the Fed’s rate hike moves have been softer of late. While portraying the same, the CME’s FedWatch Tool signals a static 71% chance of witnessing a 0.25% rate hike in May but the odds of getting a rate cut in late 2023 has recently gained attention and weighed on the US Dollar, while also fueling the XAU/USD.

Geopolitical concerns fail to tame XAU/USD bulls

While the aforementioned catalysts are mostly in favor of the Gold price, geopolitical concerns surrounding China, Russia and North Korea should have prodded the XAU/USD bulls. It should be noted that the tension between the US and China has recently escalated after Taiwan President Tsai Ing-wen’s US visit. In this regard, Reuters said that China's military simulated precision strikes against Taiwan in a second day of drills around the island on Sunday, with the island's defense ministry reporting multiple air force sorties and that it was monitoring China's missile forces. It should be noted that Russia and North Korea’s warnings to use nuclear weapons are extra catalysts that weigh on the Gold price.

While portraying the mood, the S&P 500 Futures print mild losses whereas the US 10-year and two-year Treasury bond yields keep the previous week’s downside bias around 3.37% and 3.94% respectively.

Gold buyers need validation from United States Inflation, Federal Reserve Minutes

Although the Gold bears are in command for intraday, the bulls aren’t off the table and can wait for this week’s key United States Consumer Price Index (CPI) and the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting Minutes for fresh impulse. Should the Fed officials sound cautious and dump clear forward guidance on the interest rates, backed by the downbeat US inflation data, the Gold price may witness further upside.

Also read: Gold Price Weekly Forecast: Continuation of rally depends on US inflation data

Gold price technical analysis

Gold price drops back below the three-week-old previous resistance line, around $2,000 by the press time, to portray the latest fall.

Adding strength to the XAU/USD’s downside bias are the bearish signals from the Moving Average Convergence and Divergence (MACD) indicator, as well as the near-50 level of the Relative Strength Index (RSI) line, placed at 14.

That said, the 100-bar SMA and an upward-sloping support line from mid-March, around $1,975 and $1,970 in that order, restrict short-term Gold price downside ahead of the horizontal area comprising multiple levels marked since March 15, near $1,935.

Meanwhile, the Gold price trading beyond the $2,000 round figure will need to surpass the latest high surrounding $2,032 to convince XAU/USD bulls in poking the Year 2022 high of $2,070, followed by the record top surrounding $2,075.

Gold price: Four-hour chart

Trend: Further upside expected

EUR/USD retreats from intraday high to 1.0900 but stays defensive as bulls seek fresh clues to extend the four-week uptrend during early Monday. In doing so, the Euro pair portrays the Easter Monday holiday mood, as well as anxiety ahead of this week’s top-tier data/events.

Also read: EUR/USD stays defensive around 1.0900 despite hawkish ECB, US inflation, Fed Minutes eyed

It’s worth noting that the options markets remain bullish on the major currency pair despite the latest inaction.

That said, a one-month risk reversal (RR) of the EUR/USD price, a gauge of the spread between the call and put options, printed a mild daily gain to +0.020 by the end of Friday’s North American session. With that, the weekly RR was up for the third consecutive time, to 0.110 at the latest. Further, the monthly options market signals are also firmer so far in April after rising in the last two consecutive months.

While tracing the catalysts behind the options market optimism for the EUR/USD prices, the fears surrounding the US Dollar’s reserve currency status join the comparatively more hawkish comments from the European Central Bank (ECB), than the Federal Reserve (Fed).

Moving on, the Easter Monday holiday may restrict EUR/USD moves but the US Consumer Price Index (CPI) data and the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting Minutes will be crucial for clear directions.

• USD/JPY has stretched its recovery to 132.50 as the solid US labor market has backed more rate hikes from the Fed.
• S&P500 futures are holding nominal gains despite escalating tensions between China and Taiwan.
• Ex-BoJ Nakaso is hoping for modification or an end to its bond yield control policy due to increasing side effects.

The USD/JPY pair has extended its recovery after a nominal correction to 132.50 in the Asian session amid hopes of further escalation in interest rates by the Federal Reserve (Fed). The release of the rock-bottom Unemployment Rate in the United States has stemmed fears of the continuation of the rate-hiking spell by the Fed.

S&P500 futures are holding nominal gains in the Asian session despite escalating tensions between China and Taiwan. Taiwan ministry has spotted 58 Chinese aircrafts around Taiwan Island and the continuation of drilling, which could impact the positive market sentiment. The US Dollar Index (DXY) is hopeful of recovery as the solid US labor market has supported one more rate hike from the Fed for its May monetary policy meeting.

A stellar show of decent additions of fresh talent is continued as the US economy added 236K novel jobs, almost near to the expectations of 240K. And, the Unemployment Rate tightened further to 3.5% vs. 3.6% as expected. The US labor market continues to remain tight despite higher rates from the Fed and in a course, higher rates are supportive ahead. An observation of the Fedwatch tool shows chances of one more 25 basis points (bps) rate hike near 66%. Also, the absence of headlines about further banking crises is itself good news for the USD Index.

On the Tokyo front, former Bank of Japan (BoJ) deputy governor Hiroshi Nakaso is hoping for modification or an end to its bond yield control policy due to increasing side-effects such as the hit to financial institutions' profits, reported by Nikkei, passed on by Reuters.

Ex-BoJ Nakaso believes that a huge monetary stimulus by ex-BoJ Haruhiko Kuroda in his leadership to push inflation steadily near the desired target resulted in pain for commercial banks. Therefore, the abolishment of Yield Curve Control (YCC) is important to avoid financial turmoil.

• AUD/USD struggles for directions after reversing from six-week high.
• Below 50 RSI (14), receding bearish bias of MACD signals favor corrective bounce off the key Fibonacci retracement.
• Clear downside break of one-month-old ascending trend line keeps sellers hopeful.

AUD/USD seesaws around 0.6670 as it seeks fresh clues to extend the previous day’s rebound from the 61.8% Fibonacci retracement level of its March-April upside.

Even if the Aussie pair struggles to extend the previous day’s recovery from the key Fibonacci retracement, also known as the “golden ratio”, a sustained downside break of the one-month-old ascending trend line, now immediate resistance near 0.6690, keeps bears hopeful.

Also challenging the AUD/USD buyers is the recently easing RSI (14) line, suggesting dip-buying, as well as the improving MACD line from the bearish territory.

It’s worth noting, however, that an upside break of the support-turned-resistance line of near 0.6690 isn’t an open invitation to the AUD/USD bulls as a convergence of the 50-SMA and 38.2% Fibonacci retracement level, around 0.6705, appears a tough nut to crack for the bulls.

Following that, a 13-day-old horizontal area near 0.6760 could challenge the upside momentum near 0.6755-60.

On the flip side, the 61.8% Fibonacci retracement level of around 0.6650 acts as a short-term key support to watch during the AUD/USD pair’s fresh downside.

In a case where the Aussie pair remains bearish past 0.6650, multiple levels near 0.6630 can test the sellers before directing them to the previous monthly low of near 0.6560.

AUD/USD: Four-hour chart

Trend: Further downside expected

• US Dollar Index fades bounce off two-month low, dribbles after four-week downtrend.
• Challenges to sentiment, recently hawkish Fed bets put a floor under the DXY price.
• Fears of US recession, threats to USD’s reserve currency status prod US Dollar Index bulls.
• Easter Monday to restrict market moves, US CPI, Fed Minutes in focus.

US Dollar Index (DXY) retreats to 102.00, after posting an ephemeral bounce off the two-month low during the last week. Even so, the greenback’s gauge versus six major currencies dropped in four consecutive weeks and prints mild losses by the press time as markets consolidate recent moves amid the Easter Monday holiday.

It’s worth noting that the recently firmer bets on the Federal Reserve (Fed) joined an absence of disappointment from the US employment report to put a floor under the DXY price. On the same line could be the geopolitical fears surrounding China. However, concerns about the US recession and challenges to the US Dollar’s reserve currency status exert downside pressure on the US Dollar Index.

That said, Taiwan President Tsai Ing-wen’s US visit triggered a fresh bout of US-China woes as Beijing conducts strong military drills near Taiwan Strait. “China's military simulated precision strikes against Taiwan in a second day of drills around the island on Sunday, with the island's defense ministry reporting multiple air force sorties and that it was monitoring China's missile forces,” reported Reuters.

On the other hand, Friday’s upbeat prints of the US Nonfarm Payrolls (NFP) bolster hawkish Fed bets. However, the market participants do expect a rate cut in late 2023 and hence pour cold water on the face of the US Dollar bulls. With this, the CME’s FedWatch Tool suggests 69% odds of the 0.25% rate hike in May, versus 55% before the US jobs report.

It’s worth observing that Russia’s strong usage of the Chinese Yuan, versus the US Dollar, joins a pact between Brazil and China to ignore the greenback as an intermediate currency during their trades to challenge the USD’s elite status.

On Friday, the US Bureau of Labor Statistics (BLS) revealed that Nonfarm Payrolls (NFP) rose by 236K in March, the lowest since January 2021 (considering the revisions), versus 240K expected and 326K prior. Further, the Unemployment Rate eased to 3.5% versus 3.6% prior while the Labor Force Participation Rate improved to 62.6% from 62.5%. Finally, annual wage inflation, per the Average Hourly Earnings, dropped to 4.2% from 4.6%, versus market forecasts of 4.3%. 

Looking ahead, an off in multiple markets, due to Easter Monday, may restrict DXY moves ahead of the key US Consumer Price Index (CPI) data and the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting Minutes.

Technical analysis

A one-month-old descending resistance line joins the 10-DMA to restrict the short-term US Dollar Index (DXY) upside near 102.10.

• USD/CHF has continued its back-and-forth action above 0.9040 ahead of US Inflation.
• S&P500 futures have trimmed some gains amid deepening tensions between China and Taiwan.
• Resilience in demand for core goods due to the higher labor cost index in the US might keep inflationary pressures sticky.

The USD/CHF pair is continuously trading lackluster above the critical support of 0.9036 in the early Tokyo session. The Swiss Franc asset is struggling to find any direction as investors are shifting their focus toward the release of the United States Consumer Price Index (CPI) data, which will release on Wednesday.

Meanwhile, S&P500 futures have trimmed some gains amid deepening tensions between China and Taiwan. The rising momentum of drilling around Taiwan Island by the Chinese military has stemmed caution in the market mood. Also, US equities are likely to witness volatility amid recession worries.

Jamie Dimon, CEO of JPMorgan Chase, said the recent banking turmoil due to the collapse of Silicon Valley Bank (SVB) and Signature Bank has accelerated the risk of recession in the United States, in an interview at CNN.  He further added that while the banking system is strong and sound, the recent turmoil around the financial system is “another weight on the scale” toward recession.

The US Dollar Index (DXY) is defending the 102.00 support ahead of the US Consumer Price Index (CPI) data. As per the consensus, the headline inflation will soften to 5.2% from the former release of 6.0%. Also, monthly headline CPI would decelerate to 0.3% from 0.4% reported earlier. Oil prices remained lower in March and its effect is expected to get visible in inflationary pressures.

On the other hand, core CPI that excludes oil and food prices is expected to increase to 5.6% from the former release of 5.5%. Resilience in demand for core goods due to a higher labor cost index is keeping inflationary pressures sticky. An occurrence of the same might force the Federal Reserve (Fed) to hike rates one more time in its May monetary policy meeting.

On the Swiss Franc front, Swiss markets are closed on account of Easter Monday. This week, the Swiss Franc will be guided by the Producer Price Index (PPI) data.

• USD/CAD remains pressured around intraday low after snapping four-day uptrend on opening.
• China-Taiwan tension adds strength to the geopolitical fears and allow Oil price to remain firmer.
• BoC is likely to stand pat but concerns for future moves, mixed feelings for Fed prod Loonie pair buyers.
• US CPI, BoC Governor Macklem’s speech will also be important for clear directions.

USD/CAD holds lower ground near 1.3500, snapping a four-day winning streak, as traders brace for the key data/events amid the Easter Monday holidays in major bourses. That said, the Loonie pair’s latest weakness could be linked to the firmer price of Canada’s main export item, namely WTI crude oil. However, the dovish bias from the Bank of Canada (BoC), versus recently spiked hawkish Fed bets, challenge the pair sellers.

WTI crude oil prices print 0.61% intraday gains near $81.00, after rising in the last three consecutive weeks. The black gold’s latest gains could be linked to the geopolitical concerns surrounding China and Taiwan. Also fueling the energy benchmark is the OPEC+ supply cut and the softer US Dollar.

That said, the US Dollar Index (DXY) dropped in the last three weeks in a row, pressured around 102.00 at the latest.

The fears of higher Fed rates versus no action from the Bank of Canada (BoC) gained momentum after the upbeat US Jobs report, versus no major positives from the Canadian jobs report for March.

As a result, the CME’s FedWatch Tool suggests 69% odds of the 0.25% rate hike in May, versus 55% before the US jobs report.

Talking about the data, Canada’s headline Net Change in Employment rose to 34.7K in March from 21.8K prior, versus 12K market consensus, whereas the Unemployment Rate reprinted 5.0% figure compared to analysts’ estimate of 5.1%. It’s worth noting, however, that the Participation Rate eased to 65.6% during the stated month from 65.7% expected and prior. Further, the Average Hourly Wages eased to 5.2% YoY in March versus 5.4% previous reading.

On the other hand, the US Bureau of Labor Statistics (BLS) revealed that Nonfarm Payrolls (NFP) rose by 236K in March, the lowest since January 2021 (considering the revisions), versus 240K expected and 326K prior. Further, the Unemployment Rate eased to 3.5% versus 3.6% prior while the Labor Force Participation Rate improved to 62.6% from 62.5%. Finally, annual wage inflation, per the Average Hourly Earnings, dropped to 4.2% from 4.6%, versus market forecasts of 4.3%. 

Amid these plays, US stock futures closed positive but the yields remain pressured ahead of the key BoC monetary policy meeting, US inflation and the Fed Minutes. Given the dovish concerns from the BoC and likely hawkish comments in the FOMC Minutes, the USD/CAD may witness further upside unless witnessing any surprises.

Technical analysis

USD/CAD portrays another failure to cross the 100-DMA, around 1.3530 by the press time, which in turn joins the bearish MACD signals and steady RSI to tease the Loonie pair sellers.

• GBP/USD is struggling in expecting its recovery above 1.2430 amid China-Taiwan tensions.
• The US Dollar Index (DXY) is putting efforts into defending its crucial support of 102.00 after a marginal correction.
• GBP/USD is expected to extend its correction to near the lower portion of the Rising Channel chart pattern.

The GBP/USD pair is hovering below 1.2430 after a recovery move from the round-level support of 1.2400 in the early Asian session. Expectations for a corrective move in the Cable look healthy as China-Taiwan tensions are deepening further. On late Sunday, the Taiwan Defence Ministry reported that they spotted 58 Chinese aircrafts, which also includes nine ships. Meanwhile, State Media reported that the Chinese military told about keeping the momentum of drilling around Taiwan Island.

The US Dollar Index (DXY) is putting efforts into defending its crucial support of 102.00 after a marginal correction. It is likely that geopolitical tensions would provide some support to the USD Index. The USD Index is likely to remain in action ahead of the release of the United States Consumer Price Index (CPI) data, which will release on Wednesday. Headline inflation is expected to soften further as oil prices remained weak in March, however, core inflation might accelerate as anticipated.

S&P500 futures are showing some gains in the early Asian session, indicating some strength in equities ahead of earnings season.

On a two-hour scale, GBP/USD is expected to extend its correction to near the lower portion of the Rising Channel chart pattern. The 20-period Exponential Moving Average (EMA) at 1.2436 is restricting upside attempts from the Pound Sterling.

Meanwhile, the Relative Strength Index (RSI) (14) is defending its downside around 40.00. A break below the same would trigger the bearish momentum.

For a downside move, the Cable needs to deliver a breakdown of the Rising Channel pattern below March 23 high at 1.2343, which will expose the asset to the round-level support of 1.2300 followed by March 14 high around 1.2200.

Alternatively, a decisive move above Friday’s high at 1.2453 will drive the asset towards April 04 high at 1.2525. A break above the latter would further drive the Cable toward the round-level resistance at 1.2600.

GBP/USD two-hour chart

• Silver price portrays a bullish chart pattern at the highest level in a year, retreats of late.
• Sustained trading beyond 200-HMA, steady RSI keeps XAG/USD buyers hopeful.
• Sellers stay off the table beyond $24.60, bulls may cross $26.00 on sustained upside beyond $25.00.

Silver price (XAG/USD) prints mild losses near $25.00 as bulls take a breather during a sluggish start of the week, mainly due to the Easter Monday holiday, after four-week uptrend. Even so, the bright metal portrays a “Bull Flag” chart pattern on the hourly play and keeps the buyers hopeful.

Adding strength to the upside bias is the absence of an overbought RSI (14), as well as the metal’s sustained trading past the 200-Hour Moving Average (HMA).

It’s worth noting, however, that the bulls need a successful break of the $25.00 round figure to confirm the bullish chart pattern, which in turn suggests, theoretically, a run-up toward $26.20.

However, April 2022 high near $26.25 and the previous yearly top surrounding $27.00 could challenge the Silver buyers afterward.

On the contrary, the XAG/USD weakness past the stated flag’s lower line, around $24.50 by the press time, defies the bullish chart pattern.

Though, the Silver bears still will have a long road to journey before retaking control as a two-week-old ascending support line and the 200-HMA, respectively near $24.30 and the $24.00 round figure, could challenge the downside moves.

Silver price: Hourly chart

Trend: Further upside expected