Signs of a fresh easing cycle

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The latest push to a fresh 2024 high beyond 1.2830 confirms the outlook and opens the door for the next major upside extension towards the 2023 high at 1.3143. Any setbacks should now be well supported ahead of 1.2000.

• R2 1.2635 – 3 May high – Medium
• R1 1.2600 – Figure – Medium
• S1 1.2446 – 9 May low – Medium
• S2 1.2393 – 22 April high – Medium

GBPUSD – fundamental overview

The Pound has held up exceptionally well post this latest BOE meeting in which the central bank left rates on hold as expected but produced a 7-2 split, with another member jumping in to vote for a rate cut. We also heard from a BOE Governor Bailey who said the markets were underpricing the pace of easing in the months ahead. Key standouts on Friday’s calendar come from UK GDP, trade, industrial production, and construction output, BOE speak, ECB speak, the ECB Minutes, Canada employment, Fed speak, and Michigan sentiment.

USDJPY – technical overview

The market remains confined to a strong uptrend, most recently extending to a multi-year high through 160.00. Key support comes in at 151.95, with only a weekly close below to delay the constructive outlook.

• R2 156.29 – 2 May high – Medium
• R1 156.00 – Figure – Medium
• S1 152.74 – 6 May low – Medium
• S2 151.86 – 3 May low – Strong

USDJPY – fundamental overview

Japan's current account data for March has produced the highest current account surplus in decades. Meanwhile, household spending came in above forecast. On the topic of Yen weakness, FinMin Suzuki was back at it saying he was closely watching developments. Key standouts on Friday’s calendar come from UK GDP, trade, industrial production, and construction output, BOE speak, ECB speak, the ECB Minutes, Canada employment, Fed speak, and Michigan sentiment.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6200 would give reason for rethink. Back above 0.6900 will take the big picture pressure off the downside and strengthen case for a bottom.

• R1 0.6668– 8 March high – Strong
• R2 0.6649 – 3 May high – Medium
• S1 0.6465– 1 May low low – Medium
• S2 0.6362 – 19 April/2024 low – Strong

AUDUSD – fundamental overview

The Australian Dollar is finding some selling pressure into Friday on the news of the US announcing tariffs on China. Key standouts on Friday’s calendar come from UK GDP, trade, industrial production, and construction output, BOE speak, ECB speak, the ECB Minutes, Canada employment, Fed speak, and Michigan sentiment.

USDCAD – technical overview

Above 1.3000 signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.

• R2 1.3847 – 16 April/2024 high – Strong
• R1 1.3785 – 30 April high – Medium
• S1 1.3609 – 3 May low – Medium
• S2 1.3547 – 9 April low – Strong

USDCAD – fundamental overview

Commodities have been rallying, oil is recovering, and global sentiment has ticked back up, all of which have been helping to fuel some demand for the Canadian Dollar into the end of the week. Key standouts on Friday’s calendar come from UK GDP, trade, industrial production, and construction output, BOE speak, ECB speak, the ECB Minutes, Canada employment, Fed speak, and Michigan sentiment.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

• R2 0.6083 – 10 April high – Strong
• R1 0.6049 – 3 May high– Medium
• S1 0.5852 – 19 April 2024 low – Medium
• S2 0.5800 – Figure – Medium

NZDUSD – fundamental overview

The New Zealand Dollar has held up relatively well in the face of the announcement of US tariffs on China, with the currency perhaps getting some relief from a better than expected New Zealand business PMI read. Key standouts on Friday’s calendar come from UK GDP, trade, industrial production, and construction output, BOE speak, ECB speak, the ECB Minutes, Canada employment, Fed speak, and Michigan sentiment.

US SPX 500 – technical overview

Longer-term technical studies continue to look quite extended after pushing to fresh record highs, begging for a deeper correction ahead. Look for rallies to be well capped in favor of lower tops and lower lows. Next key support comes in at 4921.

• R2 5287 – 1 April high/Record – Strong
• R1 5242 – 10 April high – Medium
• S1 5073 – 3 May low – Medium
• S2 4928 – 19 April low – Strong

US SPX 500 – fundamental overview

Though we have seen a healthy adjustment of investor expectations towards the amount of rate cuts in 2024, the market still hopes policy will end up erring more towards the investor friendly, accommodative side of things. This bet has kept stocks well bid into dips and consistently pushing record highs. The trouble right now is that inflation has been showing signs of ticking back up, all while the market contends with additional uncertainty around geopolitical risk.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1900 on a monthly close basis ahead of the next major upside extension towards 2500.

• R2 2500 – Psychological – Medium
• R1 2432 – 12 April/Record high – Medium
• S1 2277 – 3 May low – Medium
• S2 2223– 21 March high – Strong

GOLD (SPOT) – fundamental overview

The yellow metal has pushed record highs in 2024 with solid demand from medium and longer-term accounts. These players are more concerned about inflation, geopolitical risk and a less upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an end.