Tag: DAX

  • Trade Chaos Likely to Linger, June to Bring More Uncertainty

    Trade Chaos Likely to Linger, June to Bring More Uncertainty


    Markets endured another week of trade confusion, with sentiment swinging sharply on alternating headlines. As a result, investor confidence remains fragile, with markets finding little footing as the tug-of-war between hopes of progress and fear of escalation continues.

    While the 90-day reciprocal tariff truce is now in effect, its second half is shaping up to be just as uncertain. There’s potential for additional trade agreements to be finalized in the coming weeks, especially among smaller economies or non-contentious regions. However, the negotiations that matter most—between the US and the EU, and the US and China—remain fraught with difficulty. These high-stakes talks carry the most weight for global markets and, therefore, also pose the greatest downside risk.

    Equity markets around the world are showing clear signs of fatigue. The bullish momentum that since mid-April has faded, replaced by choppy, indecisive price action. With global indexes indexes stalling, the stage is set for a prolonged period of sideways or probably downward movement.

    The old market adage “sell in May and go away” might have come slightly early for some. But given the current backdrop, the phrase may still apply—with a twist. For 2025, “sell in June is not too late” may prove to be the more accurate rule of thumb. Barring a clear and credible resolution on the major trade fronts, June could be another month of whipsaw trading, fragile sentiment, and rising caution.

    Overall in the currency markets, Dollar ended as the strongest one, followed by Loonie, and then Euro. Yen was the worst performer, followed by Aussie and then Sterling. Swiss Franc and Kiwi ended in the middle. But the pairs and crosses were merely in consolidations in general.

    Global Stock Markets Lose Momentum Further

    Technically, for DOW, upside momentum has clearly been diminishing as D MACD is trending below signal line. While another rise cannot be ruled out yet, strong resistance should emerge below 45073.63 high to cap upside.

    Rise from 36611.78 is seen as the as the second leg of the corrective pattern from 45073.63. Break of 41352.09 support will bring deeper fall back to 38.2% retracement of 36611.78 to 42842.04 at 40462.08. Decisive break there will suggest near term reversal, and target 61.8% retracement at 38991.74 and below.

    Similar picture is seen in NASDAQ as it’s also losing upside momentum as seen in D MACD. While another rise cannot be ruled out, upside should be capped by 20204.58 high. Break of 18599.68 support will bring deeper fall to 38.2% retracement of 14784.03 to 19389.39 at 17630.14. Further break there will argue that the corrective pattern from 20204.58 has already started the third leg.

    FTSE’s outlook is also similar, even though it’s an outperformer comparing to the US stock indexes. D MACD suggests that FTSE is also losing momentum. In case of another rise, upside should be limited by 8908.82 high. Break of 8604.80 support will bring deeper pullback to 38.2% retracement of 7544.83 to 8824.00 at 8335.36. Further break there will argue that corrective pattern from 8908.82 has started the third leg already.

    Even the record breaking DAX is also losing momentum as seen in D MACD. Strong resistance is expected from 100% projection of 17024.82 to 23476.01 from 18489.91 at 24940.97 to limit upside, in case of another rally. Bring of 23274.85 will indicate that a correction has started to 55 D EMA (now at 22848.19) and below.

    Dollar Index to Engage in More Consolidations before Downside Breakout

    Dollar Index gyrated in range above 97.92 short term bottom last week. Outlook is unchanged that it’s now in consolidation to the decline from 110.17. The pattern might be set to extend further due to market uncertainty. But in case of another rise, strong resistance should be seen from 38.2% retracement of 110.17 to 97.92 at 102.60 to limit upside. Firm break of 97.92 will confirm down trend resumption.

    Also, fall from 110.17 is seen as the third leg of the pattern from 114.77 (2022 high). On resumption, next target is 100% projection of 114.77 to 99.57 from 110.17 at 94.97.

    EUR/USD Weekly Outlook

    EUR/USD’s price actions from 1.1572 are seen as a corrective pattern to rally from 1.0176, which might still be extending. On the upside, above 1.1417 will bring retest of 1.1572 first. On the downside, below 1.1209 will target 1.1064 again. But overall, rise from 1.0176 is expected to resume after the correction completes at a later stage.

    In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 55 W EMA (now at 1.0856) holds.

    In the long term picture, the case of long term bullish reversal is building up. Sustained break of falling channel resistance (now at around 1.1290) will argue that the down trend from 1.6039 (2008 high) has completed at 0.9534. A medium term up trend should then follow even as a corrective move. Next target is 38.2% retracement of 1.6039 to 0.9534 at 1.2019.



    Source link

  • Tariff Truce Wobbles at Halfway Mark; Risk Sentiment Falters on Renewed Threats

    Tariff Truce Wobbles at Halfway Mark; Risk Sentiment Falters on Renewed Threats


    Trade war roared back into focus late last week, derailing fragile market sentiment already strained by concerns over the ballooning US deficit. The catalyst came in the form of a sharp threat from US President Donald Trump on European Union imports. This abrupt escalation shattered hopes that the 90-day truce period would lead to calmer trade diplomacy, and instead reignited fears of a broader trade war just as markets were struggling to absorb fiscal uncertainty.

    US equities tumbled in response, with heavy losses across major indices, while European bourses weren’t spared either. Risk aversion swept through global markets, pushing investors toward traditional safe-haven assets.

    Dollar, which had already been under pressure from Moody’s downgrade and debt sustainability concerns, took another hit and ended the week as the worst-performing major currency. Confidence in US assets appears increasingly fragile as both fiscal and trade risks deepen.

    Aussie followed as the second weakest, burdened not just by global risk aversion but also by the dovish tone from RBA earlier in the week, while Loonie also suffered at the bottom.

    In contrast, the Japanese Yen and Swiss Franc surged to the top of the FX leaderboard, clearly benefiting from haven demand. Gold also staged a powerful rally, with its bullish momentum signaling deep market unease.

    Euro and Sterling settled in the middle of the pack. While the Euro showed some vulnerability to Trump’s tariff threat, it remained relatively supported. Sterling, meanwhile, was underpinned by a series of stronger-than-expected economic data, including upside surprises in inflation and retail sales.

    Trade War Returns to Spotlight as Trump’s Tariff Threat on EU Hammers Markets, Dollar Slides

    The global financial markets, which had been preoccupied with US sovereign debt concerns and the impact of a Moody’s downgrade earlier in the week, saw sentiment quickly shift as trade war tensions re-emerged. The trigger came late Friday, when US President Donald Trump declared he is “recommending a straight 50% Tariff on the European Union,” citing frustration with stalled negotiations. The announcement stunned investors and reignited fears of a wider spiral, sending US stocks and Dollar sharply lower into the weekly close.

    Equity markets, which had enjoyed a strong six-week rally driven by optimism from the 90-day tariff truce with major trading partners, were caught off guard. As little tangible progress was made halfway through the truce period, Trump’s shift back to hardline tactics was interpreted as a sign that the administration may be preparing to walk away from negotiation tables. The renewed threat has not only clouded the outlook for trade but also raised concerns over the policy direction in Washington.

    Speaking at a White House event, Trump made clear his stance: “I’m not looking for a deal. I mean, we’ve set the deal. It’s at 50%.” Treasury Secretary Scott Bessent echoed the sentiment, suggesting the tariff threat was intended to “light a fire under the EU.” These remarks hinted at a deliberate strategy to escalate pressure on Brussels ahead of the June 1 deadline.

    In response, European Commission Vice President Maros Sefcovic stated the EU remains “fully engaged” and committed to securing a mutually beneficial deal. He emphasized that negotiations must be “guided by mutual respect, not threats,” and warned the EU stands ready to defend its interests. Despite diplomatic overtures, the tone on both sides suggests little ground has been gained, making further market volatility likely as the deadline nears.

    In summary, the re-ignition of trade tensions with the EU has thrown markets back into uncertainty. With US fiscal policy already under scrutiny and tariff escalation threatening global growth, investors may remain on the defensive until clearer direction emerges, either through a breakthrough in negotiations or a change in Washington’s rhetoric. Until then, volatility and risk aversion are likely to dominate.

    Technically, DOW’s extended decline last week indicates that a short term top was already formed at 42842.04. More consolidations would be seen with risk of deeper decline. But overall near term outlook will stay bullish as long as 38.2% retracement of 36611.78 to 42842.04 at 40462.08 holds.

    However, rise from 36611.78 is seen as the second leg of the medium term corrective pattern from 45073.63 high. So, even in case of another rise, DOW should start to lose momentum again as it approaches 45073.63.

    Dollar Index’s late break of 99.17 support argues that corrective rebound from 97.92 might have completed at 101.97 already. Further decline is now in favor in the near term to retest 97.92 low first. Firm break there will resume the larger down trend to 61.8% projection of 100.17 to 97.92 from 101.97 at 94.40.

    European Stocks Also Hit by Tariff Shock; DAX and CAC Signal Near-Term Tops

    European equities also slumped in tandem with the US on Friday on Trump’s tariff threat. The announcement dealt a direct blow to investor sentiment across the region, with Germany’s DAX and France’s CAC 40 each falling around -1.6% on the day.

    However, Germany’s equity outlook, and to a lesser extent the region’s, should remain underpinned by fiscal expansion at both national and EU levels, which could cushion downside risks and support a medium-term bullish outlook.

    Technically, the late selloff in DAX indicates that 24154.24 record high should already be a short term top. Near term risk is mildly on the downside for pull back to 55 D EMA (now at 22610.12). Nevertheless, strong support should emerge from 38.2% retracement of 18489.91 to 24154.24 at 21989.23 to contain downside to bring rebound.

    CAC should have formed a short term top at 7955.53, and turned into consolidations. Given CAC’s underperformance comparing to DAX, there is risk of dipping through 38.2% retracement of 6763.76 to 7955.53 at 7500.27. But strong support should be seen above 61.8% retracement at 7219.02 to contain downside.

    Aussie Under Fire as RBA’s Dovish Cut Fuels July Easing Bets

    Aussie ended last week as one of the weakest performers among major currencies, additionally weighed down by the dovish 25bps rate cut from RBA. While the move was widely expected, RBA Governor Michele Bullock revealed that the board had actively considered a larger 50bps reduction before settling on the more measured step.

    Bullock also deliberately leave the door open for fasting easing, as she indicated that “if we need to move quickly, we can. We have got space.”

    Alongside the cut, RBA downgraded its 2025 GDP growth forecast from 2.1% to 1.9% and revised year-end CPI projections sharply lower, from 3.7% to 3.0%.

    These adjustments cemented the market’s view that the easing cycle has room to run, with rate futures now assigning more than 50% probability to another cut as early as July and fully pricing in a second 25bps cut by August.

    Technically, AUD/JPY failed to sustain above 38.2% retracement of 109.36 to 86.03 at 94.94, and retreated from there. Focus is now on 92.10 cluster support (38.2% retracement of 86.03 to 95.63 at 91.96).

    Strong rebound from 91.96/92.10 will retain near term bullishness. Further break of 95.63 will solidify the bullish case that whole fall form 109.36 has completed as a three-wave correction to 86.03.

    However, firm break of 91.96/92.10 will argue that the rebound has completed. More importantly, the down trend from 109.36 is likely still in progress for another low below 86.03.

    Gold Eyes Fresh Record High as Safe Haven Flows Persist

    Gold rallied strongly last week, supported by a confluence of factors including persistent concerns over the US fiscal outlook and escalating global trade tensions.

    With global equities showing signs of strain and long-dated US Treasury yields on the rise, capital has flowed steadily into Gold. The precious metal’s resilience suggests it may be gearing up to break above the record high of 3500, especially if risk aversion intensifies in the days ahead.

    Technically, corrective decline form 3499.79 should have completed with three waves down to 3120.34. That came after strong support from 55 D EMA (now at 3177.32) and 38.2% retracement of 2584.24 to 3499.79 at 3150.04.

    Further rise is expected as long as 3279.22 support holds, to retest 3499.79 high first. Decisive break there will resume larger up trend to 61.8% projection of 2584.24 to 3499.79 from 3120.34 at 3686.14 next.

    GBP/USD Weekly Outlook

    GBP/USD’s up trend resumed by breaking through 1.3442 resistance last week. Initial bias remains on the upside this week for 61.8% projection of 1.2706 to 1.3442 from 1.3138 at 1.3593, and then 100% projection at 1.3874. On the downside, below 1.3389 minor support will turn intraday bias neutral again first.

    In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.2843) holds, even in case of deep pullback.

    In the long term picture, for now, price actions from 1.0351 (2022 low) are still seen as a corrective pattern to the long term down trend from 2.1161 (2007 high) only. However, firm break of 1.4248 resistance (38.2% retracement of 2.1161 to 1.0351 at 1.4480) will be a strong sign of long term bullish reversal.



    Source link

  • Global Risk Sentiment Brightens, But Caution Lingers Around US Assets

    Global Risk Sentiment Brightens, But Caution Lingers Around US Assets


    Global risk sentiment showed further improvement last week, with stock markets around the world posting impressive gains. Although headlines continued to focus on the confusing state of U.S.-China trade tensions, there was quiet but notable progress on multiple trade fronts, including US talks with Japan, South Korea and India.

    US equities rebounded alongside the global rally even though they still lack the decisive momentum needed to confirm that a durable bottom has been established. European markets, on the other hand, painted a far more encouraging picture.

    The strength of the rebound in European equities suggests that the worst of the April selloff may already be behind us. Moreover, there is a growing sense that the sharpest phase of the tariff crisis has passed, and that incremental improvements could take root from here.

    The shift in sentiment was clearly reflected in the currency markets too. Kiwi ended the week as the strongest performer, followed by Aussie and Sterling. All three currencies benefited from the rebound in risk appetite, with investors rotating out of safe-haven assets and into higher-yielding or growth-linked currencies. On the other end, the safe-haven trio—Swiss Franc, Yen, and Euro—underperformed, as investors rotated away from defensive assets amid easing fears. Dollar and Loonie finished in the middle of the pack.

    While the equity rally suggests a return of broader risk appetite, investor interest in US assets has yet to fully recover. This is likely due to ongoing concerns over U.S. policy consistency and the uncertain path for trade negotiations. Until clearer signals emerge from Washington and stronger technical confirmations develop in US stock markets, Dollar may continue to lag behind the recovery seen elsewhere.

    Markets Rally on Trade Progress, But Major Hurdles with China and EU Remain

    Global stock markets extended their strong rally last week. There seems to be growing optimism that the worst phase of the tariff crisis may be behind us, at least for now. Trade negotiations appear to be picking up momentum across several fronts, offering hope for partial resolutions. Recent economic data, particularly PMI surveys from the Eurozone and the US, suggest that businesses have been bracing well for uncertainty, cushioning the blow from trade tensions.

    In an interview with Time magazine on Friday, US President Donald Trump said he expects “many” trade deals to fall into place over the next three to four weeks. Positive signals are emerging from several bilateral channels too. Japan’s Economy Minister Ryosei Akazawa is set to visit Washington this week for a second round of talks. US Treasury Secretary Scott Bessent has hinted that a US-South Korea trade deal could be finalized as early as next week. US and India are reported to have agreed on the terms for a bilateral deal covering trade in goods, services, and critical sectors like e-commerce and minerals. Switzerland also announced it was among a group of 15 countries given “somewhat preferential treatment” in tariff talks, with Swiss President Karin Keller-Sutter indicating that the 90-day truce could be extended for active negotiating partners.

    However, not all fronts are moving smoothly. Despite initial discussions, talks between the US and the EU have yet to yield tangible compromises. Progress remains slow, even in setting a basic framework for formal negotiations. The slow movement with Europe highlights that achieving broad global de-escalation is far from guaranteed.

    Meanwhile, the situation with China remains the murkiest. Rumors continue to swirl about informal discussions, but no clear confirmation has been provided by either side. Trump insists that some communication with Beijing is ongoing, while Chinese officials deny that any talks are happening. Although there were earlier hopes for de-escalation, Trump has reiterated that tariffs on China will remain in place unless “they give us something substantial.”

    Without a clear breakthrough or even a defined negotiation channel, US-China trade tensions remain a major overhang for global markets, tempering some of the broader optimism.

    European Strength Offers Hope, Caution Persists for US Indexes

    While US stocks have staged a strong rebound recently, the technical backdrop remains somewhat unconvincing. The recovery lacks decisive confirmation, particularly in DOW. In contrast, the outperformance seen in European markets is offering hope that the worst of the market correction could already be behind us. Particularly in the UK and Germany, technical signals suggest that early April’s steep selloff may have been a medium-term shakeout rather than the start of a long-term bearish trend.

    In the UK, FTSE ‘s breach of 55 D EMA (now at 8420.51) and break of 55 W EMA (now at 8260.66) suggest that corrective fall from 8900.82 has already completed at 7554.83. Price actions from 8908.82 is likely just a medium term consolidations pattern, rather than a long term bearish trend reversal. The range of the consolidations should be set between 38.2% retracement of 4898.79 to 8902.82 at 7376.99 and 8908.82.

    Nevertheless, for the near term, while further rise could be seen as long as 8166.53 support holds, FTSE should start to lose momentum above 55 D EMA.

    Germany’s DAX tells a similar story. The index’s corrective fall from the 23476.01 has likely completed at 18489.91. What we are seeing now is a medium-term consolidation rather than a full trend reversal. The range is set between 38.2% retracement of 8255.65 to 23476.01 at 17661.83 and 23476.01.

    For the near term, further rise is in favor as long as 21044.61 support hold. But DAX should lose momentum as it approaches 23476.01 high.

    Turning to the US, developments in Europe suggest that DOW may eventually find solid support from 38.2% retracement of 18213.65 to 45073.63 at 34813.12 to contain downside even in case of another fall, should another selloff occur. Still, firm break of 55 D EMA (now at 41361.53) is needed to indicate that fall from 45703.63 has completed. Or risk will remain on the downside for the near term.

    NASDAQ’s picture is a little bit more promising than DOW. Firm break of 55 D EMA (now at 17604.27) will indicate that fall from 2024.58 has completed at 14783.03, after defending 38.2% retracement of 6631.42 to 20204.58 at 15019.63. That should set the range for medium term consolidations for NASDAQ.

    Dollar Struggles Despite Risk Stabilization, Policy Uncertainty Remains a Drag

    While risk sentiment has shown signs of stabilizing in global markets, and even hints at a return of risk appetite, this does not necessarily imply a renewed interest in US assets. In particular, both the Dollar and US. Treasuries continue to face headwinds until investors see more policy consistency from the Trump administration. Markets remain wary of abrupt shifts in trade policy, tariff threats, and broader economic strategies, which cloud the overall investment climate for Dollar-based assets.

    Another important factor is the evolving US trade balance. Should the Trump administration succeed in narrowing the US trade deficit, there could be a meaningful structural impact on the demand for Dollar-denominated assets. A narrower deficit would mean fewer surplus Dollars circulating abroad to be recycled into US Treasuries and other assets, potentially pushing yields higher and softening the Dollar’s appeal at the same time, particularly if fiscal deficits remain large.

    Technically, Dollar Index’s recovery from 97.92 short term bottom is lacking decisive momentum. As long as 100.27 resistance holds, near term risk will remain on the downside for another fall through 97.92 sooner rather than later. Break of 97.92 will pave the way to 100% projection of 114.77 to 99.57 from 110.17 at 94.97 next.

    Nevertheless, firm break of 100.27 would set the stage for stronger rebound to 38.2% retracement of 110.17 to 97.92 at 102.60, even still as a corrective move.

    NZD/JPY Extends Rebound, Bullish Reversal Hinges on 87.35 Break

    NZD/JPY extended the rebound from 79.79 last week as risk sentiment continued to improve. The breach of falling trend line resistance is a tentative sign that fall from 92.45 has completed at 79.79. Further rise is now in favor as long as 83.88 support holds.

    On the upside, decisive break of 87.35 cluster resistance (38.2% retracement of 99.01 to 79.79 at 87.13) will argue that corrective decline from 99.01 has already completed too. Further rally should then be seen to 61.8% retracement at 91.66.

    However, rejection by 87.13/35 will keep near term outlook bearish. Break of 83.88 support will bring retest of 79.79, and possibly resumption of the down trend from 99.01 too.

    EUR/CHF Weekly Outlook

    EUR/CHF’s stronger than expected rebound last week suggests that fall from 0.9660 has already completed at 0.9218, ahead of 0.9204 low. Rebound from 0.9218 is either a corrective move, or the third leg of the pattern from 0.9204. In either case, further rally is expected this week as long as 0.9336 support holds, towards 0.9660. However, break of 0.9336 will bring retest of 0.9204/18 support zone.

    In the bigger picture, prior rejection by long-term falling channel resistance (now at 0.9555) retains medium term bearishness. That is, down trend from 1.2004 (2018 high) is still in progress. Firm break of 0.9204 (2024 low) will confirm resumption. This will remain the favored case as long as 0.9660 resistance holds.

    In the long term picture, overall long term down trend is still in force in EUR/CHF. Outlook will continue to stay bearish as long as 55 M EMA (now at 0.9962) holds.



    Source link

  • Market Turmoil Unleashed as Global Tariff Battlelines Drawn

    Market Turmoil Unleashed as Global Tariff Battlelines Drawn


    The global financial markets were shaken last week as US President Donald Trump’s long-anticipated reciprocal tariff plan arrived with a bang. The magnitude of the tariff rates, the number of countries impacted, and the sheer complexity of implementation shocked investors. What could have been a temporary setback quickly spiraled into a broader risk event, fueling sharp selloffs and potentially igniting a full-fledged bear market.

    Matters only worsened after China swiftly responded with its own retaliatory measures. The rhetoric on both sides is heating up. Trump, doubling down on his hardline stance, declared on social media that his “policies will never change” and accused China of panicking. Meanwhile, Chinese officials dismissed the US measures, mockingly claiming, “The market has spoken.”

    With Washington and Beijing locked in confrontation, global focus now turns to how the rest of the world will react. The first clear sign of diplomacy came from Vietnam, where General Secretary To Lam phoned Trump and offered to negotiate a deal to reduce tariffs on US exports to zero, in exchange for equal treatment. If this sets a precedent, it may provide insight into whether Trump’s long-term vision is truly a bilateral web of lowered trade barriers. Or, he has something else in his mind.

    Still, the true litmus test lies ahead with the US-EU trade negotiations. European Commission President Ursula von der Leyen has shown no signs of backing down, warning that the EU “holds a lot of cards” and that “all instruments are on the table.” Europe’s massive market and leadership in tech give it leverage, and should talks break down, the threat of firm and coordinated countermeasures looms large. The shape and tone of the US-EU discussions will be critical in determining whether a full-blown global trade war materializes, or if some de-escalation is still possible.

    In the currency markets, Swiss Franc emerged as the ultimate winner last week, solidifying its position as the top safe-haven asset, while Yen followed closely. Euro, notably, seems to be replacing Dollar as a safe-haven choice. The

    At the bottom of the currency ladder was the Aussie, which was hammered by China’s retaliation, given its economic dependence on Chinese demand. Kiwi followed while Sterling rounded out the bottom three. Loonie, and Dollar saw mixed results—gaining ground against commodity currencies but faltering against their safe-haven counterparts.

    Oversold Bounce Possible, Yet Trade War Escalations Keep Downside Risks Elevated

    Following last week’s brutal stock market selloff, there’s technical scope for a short-term rebound. Markets are deeply oversold, and some bargain-hunting or short coverers may lift equities from their recent lows in the days ahead. However, any recovery in risk sentiment will likely be capped by the still-heavy cloud of uncertainty surrounding the unfolding global tariff war.

    Despite the market’s hopes, it’s unrealistic to expect trade negotiations — especially those involving sweeping reciprocal tariffs and multiple major economies — to wrap up quickly. The threat of a prolonged standoff or even a complete breakdown in talks remains high. In such a case, a full-blown global trade war could be on the table, with wide-ranging consequences for investment, consumption, and global growth.

    Of particular concern is Europe’s position in this trade crossfire. Both the EU and ECB have previously flagged concerns that China could redirect excess supply to the EU if blocked by US tariffs. Such dumping would put further pressure on already weak growth and inflation in the region. To avoid this, Europe might be forced to erect its own trade barriers against China, risking retaliation and further fragmentation of global trade flows.

    In this increasingly fragile environment, the risks for a synchronized global slowdown looms large. However, unlike the Great Recession of 2008-09, unlikely the country could act as a buffer this time. China itself is now a central target in the trade conflict, and its export-driven model could face unprecedented pressure from multiple fronts. That leaves the world vulnerable to a more prolonged and widespread economic downturn if trade tensions escalate further.

    For traders and investors, the message is clear. Any near-term rally should be treated with caution. Rebounds may be sharp, but as long as key technical resistance levels in major indexes like DOW, Nikkei, or DAX remain intact, it’s premature to call it a return to normal. Until then, the base case remains a fragile market dominated by geopolitical risk, with any relief rallies vulnerable to sudden reversals.

    Technically, for DOW, it’s now at an important support zone of the long term rising trend line and 38.2% retracement of 28660.94 to 45071.29 at 38802.54. A rebound from current level would be reasonable, but risk will stay heavily on the downside as long as 55 W EMA (now at 41260.37) holds. However, sustained break of 38802.54 will raise the change of even deeper correction to next key support at 55 M EMA (now at 35554.06).

    NASDAQ’s outlook was worse with the break of 38.2% retracement of 10088.82 to 20204.68 at 16340.36. Risk will stay on the downside as long as 55 W EMA (now at 17770.58) holds. Fall from 20204.58 should be on track to 55 M EMA (now at 14387.21) on next fall.

    Nikkei’s steep fall confirmed that corrective pattern from 42426.77 (2024 high) has already started the third leg. Strong bounce from current level will keep Nikkei inside the long term rising channel. But risk will stay on the downside as long as 55 W EMA (now at 37604.93) holds. Sustained trading below the channel support will bring even deeper fall to 55 M EMA (now at 31405.39) or even further to 38.2% retracement of 6994.89 (2009 low) to 42426.77 at 28891.80.

    Outlook in DAX is slightly better thanks to the strong rally in March. But still, near term risk will be on the downside as long as 55 D EMA (now at 22102.60) holds. Fall from 23476.01 is seen as corrective the up trend from 11862.84 (2022 low only). There are a few levels ahead that could help floor the correction, including 55 W EMA (now at 19768.44), trend line support at around 19200, and 38.2% retracement of 11862.84 to 23476.01 at 19039.78.

    Will 100 Be the Savior for Sliding Dollar Index?

    Dollar Index staged a notable late-week rebound, closing at 103.02 on Friday, well off the week’s low of 101.26. The move helped ease immediate downside pressure. The 100 psychological level, along with the 55 M EMA (now at 101.01) could provide a floor in the near term and turn the index into consolidations. Still, firm break of 104.68 resistance is needed to confirm short term bottoming first. Or risk will remain on the downside.

    From a broader perspective, the fall from 110.17 is seen as the third leg of a larger correction originating from 114.77 (2022 high). Decisive break below key 99.57/100.15 support zone would open the door for deeper medium term fall to decade-long rising channel support (now at 95.80), or even further to 100% projection of 114.77 to 99.57 from 110.17 at 94.97.

    A critical variable in Dollar’s path is the development of US Treasury yields. The sharp drop in the 10-year yield last week reinforces the view that the broader corrective pattern from 4.997 (2023 high) is in another downleg.

    Risk will stay on the downside as long as 55 W EMA (now at 4.255) holds. Further decline is likely to 3.603 support.

    Even so, solid technical support should emerge from the 38.2% retracement of 0.398 to 4.997 at 3.240 to contain downside. That should provide some support to floor Dollar’s decline in the medium term.

    Swiss Franc Dominates in Europe, Would It Cap EUR/GBP Advance?

    Swiss Franc ended last week as the strongest European currency, outperforming both Euro and the risk-sensitive Sterling by a mile.

    GBP/CHF’s break of 1.1086 support suggests that whole rally from 1.0741 has completed at 1.1501. Deeper fall should be seen back to 1.0741 support first. Firm break there will argue that long term down trend is ready to resume through 1.0183 (2022 low). Meanwhile, above 1.1193 minor resistance will turn bias neutral and bring consolidations first, before staging another fall.

    As for EUR/CHF, focus is back on 0.9331 support after the sharp fall. Firm break there should confirm that rebound form 0.9204 has completed at 0.9660. More importantly, that would also confirm rejection by the long term channel resistance. Larger down trend might then be ready to resume through 0.9204.

    EUR/GBP resumed the rise from 0.8239 and hit as high as 0.8522, just shy of 100% projection of 0.8239 to 0.8448 from 0.8314 at 0.8523. The break of medium term falling channel resistance is a bullish sign. It’s also plausible that down trend from 0.9267 (2022 high) has completed at 0.8221, just ahead of 0.8201 key support (2022 low). Firm break of 0.8523 will affirm this case, and target 0.8624 cluster resistance (38.2% retracement of 0.9267 to 0.8221 at 0.8621) for confirmation of bullish reversal.

    However, for EUR/GBP to extend its bull run decisively, support is needed from a rebound in EUR/CHF. If EUR/CHF breaks down further below 0.9331 and drags on Euro more broadly, EUR/GBP would struggle to gain traction or even come under pressure itself.

    AUD/CAD and AUD/NZD in free fall

    Commodity currencies all declined broadly on risk aversion. But Aussie was the worst by far, particularly hard-hit following China’s announcement of retaliatory tariffs against the US.

    AUD/CAD’s break of 0.8562 (2023 low) suggests that whole down trend from 0.9991 (2021 high) is resuming. Outlook will stay bearish as long as 0.8853 support turned resistance holds, even in case of recovery. Next target is 161.8% projection of 0.9375 to 0.9128 from 0.8853 at 0.8283.

    AUD/NZD’s break of 1.0789 support suggests that rise from 1.0567 has already completed at 1.1177 already. More importantly, whole rebound from 1.0469 (2022 low) could have finished as a three-wave corrective rise too. Near term outlook will now remain bearish as long as 1.0904 support turned resistance holds. Deeper fall would be see back to 1.0567 support next. Firm break there will raise the chance that whole down trend from 1.1489 (2022 high) is ready to resume through 1.0469.

    USD/JPY Weekly Outlook

    USD/JPY’s fall from 158.86 resumed last week and hits as low as 144.54. But a temporary low should be formed with subsequent recovery. Initial bias is turned neutral this week for consolidations first. Outlook will remain bearish as long as 151.20 resistance holds. Below 144.54 will target 61.8% projection of 158.86 to 146.52 from 151.20 at 143.57. Break there will target 139.57 low.

    In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low), with fall from 158.86 as the third leg. Strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

    In the long term picture, it’s still early to conclude that up trend from 75.56 (2011 low) has completed. A medium term corrective phase should have commenced, with risk of deep correction towards 55 M EMA (now at 137.30) and even below.



    Source link

  • DAX is declining in an impulsive structure [Video]

    DAX is declining in an impulsive structure [Video]


    The $DAX appears to be tracing a five-wave impulsive decline from its recent high on March 18, 2025. In Elliott Wave theory, an impulsive structure consists of five distinct waves. Wave 1, 2, 3, 4, and 5 as motive wave moves the direction of the prevailing trend, which in this case is downward. This pattern indicates a strong, directional move, with waves ((i)), ((iii)), and ((v)) being motive (driving the decline) and waves ((ii)) and ((iv)) serving as countertrend corrections.

    Starting from the March 18 peak, wave ((i)) likely initiated the downturn which ended at 22723.19. It was followed by a corrective wave ((ii))  rebound towards 23204.59. Wave ((iii)), typically the longest and most powerful in an impulsive sequence, should push the index lower with momentum. A smaller corrective wave ((iv)) is then expected to follow, offering a brief bounce. Then wave ((v)) should complete the structure, potentially finding a bottom. The impulsive nature suggests that each motive wave ((i)), ((iii)), ((v))) subdivides into its own five-wave pattern, reinforcing the bearish outlook.

    Key levels to watch include support zones where prior corrections have held. Exact targets however depend on the unfolding wave lengths and Fibonacci relationships. Expect further downside until the fifth wave concludes. Afterwards, a larger corrective rally could emerge. This view aligns with sentiment for a continued near-term decline in the $DAX, driven by an impulsive bearish sequence.

    DAX 60 minutes Elliott Wave chart

    DAX Elliott Wave [Video]

     



    Source link

  • Markets Rush to Safe Haven as Tariff Clock Ticks Down

    Markets Rush to Safe Haven as Tariff Clock Ticks Down


    While US investors managed to stay relatively composed through most of last week, the calm cracked heading into the weekend. Stocks saw extended selloffs, Treasury yields dropped, and Gold surged to yet another record high — all classic signs of a decisive flight to safety. With risk appetite now clearly under pressure, traders are no longer waiting to see what happens next. They’ve begun positioning defensively ahead of April 2, dubbed “Liberation Day,” when the US is expected to announce sweeping reciprocal tariffs.

    That looming event, along with inevitable retaliatory measures from trading partners, has injected a fresh wave of uncertainty into the outlook. Risk-off sentiment is likely to dominate US markets in the near term, at least until the full scale of the tariff fallout becomes clear — including possible re-retaliations.

    A big question is whether European markets, which showed notable resilience through March, can continue to defy the global jitters. Stocks in Germany and the UK have largely outperformed US peers, and Euro has led major currencies higher for the month. But the divergence might be tested soon, especially if the trade conflict spills into sectors crucial to the Eurozone’s export-heavy economy.

    Meanwhile, forex markets have remained relatively stable, with most major pairs stuck inside the prior week’s ranges. Kiwi was the lone exception. However, late-week price action across several currency pairs — particularly EUR/USD — suggests that breakouts may be imminent. The common currency is showing signs of bullish potential, with traders watching closely to see whether March strength can evolve into something even more meaningful.

    Ultimately, April could be a make-or-break month for the Euro. Either it confirms a genuine bullish turn, reversing the multi-decade downtrend, or it becomes just another short-lived bounce in a longer-term bearish cycle. Otherwise, the March rally risks being remembered as another false dawn in the common currency’s struggle to reverse its long-term decline.

    Wall Street Sinks as Markets Front-Run Trump’s “Liberation Day” Tariff Blitz

    US equities closed out the week with sharp losses, as fears over the looming escalation in trade tensions and persistent inflation sent risk sentiment spiraling. S&P 500 fell -1.53% on the week, while DOW dropped -0.96%. Tech bore the brunt of the selloff, with NASDAQ sliding -2.59%. That puts the NASDAQ on track for a painful monthly decline of over -8%, which would mark its worst monthly performance since December 2022.

    The market is being squeezed from two ends. On one side, uncertainty over the scope and scale of US tariffs is weighing on sentiment. On the other, resilient inflation data, especially in core readings, is reinforcing expectations that Fed will keep interest rates higher for longer. Together, these twin pressures are raising fears of a broader slowdown in consumer spending, business investment, and overall economic growth, with the risk of tipping the US into recession.

    Trump’s steel and aluminum tariffs have already been in place, but tensions intensified last week as he announced a fresh 25% levy on imported cars and auto parts. That was a mere prelude to what he has dubbed “Liberation Day” on April 2, when the broader reciprocal tariff regime is expected to be unveiled. Stock markets may already be bracing for impact, with traders possibly front-running the announcement, despite the usual quarter-end rebalancing flows.

    The broader concern is that even after the April 2 announcement, the tariff saga won’t be over. Canada and the EU are almost certain to respond with retaliations, and China’s stance remains unclear. Others, like the UK and Australia, are expected to hold back. But should retaliation begin to pile up, there is every chance that Trump will double down with even more aggressive measures, setting off a full-blown global trade war.

    Still, there is a glimmer of hope. If current market anxiety is more about the “uncertainty” surrounding tariffs rather than the “actual impact” of tariffs themselves, there may be room for a sentiment rebound once the details are made clear — hopefully sometime in Q2.

    But that’s a big assumption, and one that relies heavily on the scope, implementation, and global response to the tariffs.

    Technically, S&P 500’s rebound from 5504.65 should have completed at 5786.95, ahead of falling 55 D EMA (now at 5833.15). Focus for the next few days will be back on 5504.65 support. Firm break there will resume the corrective decline from 6147.47 high to 38.2% retracement of 3491.58 to 6147.43 at 5132.89. Strong support should be seen there to contain downside and bring rebound, at least on first attempt.

    Similarly, NASDAQ’s corrective recovery from 17238.23 should have completed at 18281.13, ahead of falling 55 D EMA (now at 18608.86). Break of 17238.23 in the next week days will resume the corrective fall from 20204.58 to 38.2% retracement of 10088.82 to 20204.58 at 16340.36. Strong support should be seen there to bring rebound, at least on first attempt. However, firm break there will pave the way to 15708.53 support next.

    Yields Tumble on Safe Haven Flows, Dollar Index Relatively Resilient

    US 10-year Treasury yields fell sharply on Friday, even as core PCE inflation surprised to the upside. The data highlighted persistent inflationary pressures, with the core PCE accelerating to 2.8% yoy, above expectations and well above Fed’s 2% target. Typically, such data would push yields higher as markets price out rate cuts. However, Friday’s yield decline suggests a different narrative dominated—one of risk aversion.

    Technically, corrective recovery from 4.106 could have already completed at 4.387 after hitting falling 55 D EMA (now at 4.3650). Break of 4.174 support will argue that the whole decline from 4.809 is ready to resume through 4.106 short term bottom. Next target will then be 61.8% projection of 4.809 to 4.106 from 4.387 at 3.952, which is below 4% psychological level.

    More importantly, the next fall will solidify that decline from 4.809 is another leg inside the medium term pattern from 4.997 (2023 high) with risk of extending to 3.603 (2024 low) and below.

    Dollar Index only dipped slightly on Friday and the development argues that corrective recovery from 103.19 might still extend. But even in case of another rise, upside should be limited by 55 D EMA (now at 105.64). Break of 103.19 will resume the fall from 110.17 to 100.15 support next.

    Crucially, the next fall will further solidify the case that decline from 110.17 is the third leg of the pattern from 114.77 (2022 high). Break of 100.15 support will pave the way through 99.57 (2023 low) to 100% projection of 114.77 to 99.57 from 110.17 at 94.97.

    March Belongs to Europe, But Can Momentum Survive April’s Storm?

    Despite rising global trade tensions and the looming threat of reciprocal US tariffs, European currencies and assets have emerged as the standout performers for March. In the equity space, major European indices like Germany’s DAX and the UK’s FTSE have remained relatively insulated from the sharp selloff seen on Wall Street.

    Meanwhile, Euro has led the charge in the currency markets, with Sterling and, to a lesser extent, Swiss Franc following closely. The coming weeks will be critical in determining whether this resilience in European markets can be sustained or even turn into renewed momentum.

    Technically, with 8474.41 resistance turned support intact, FTSE’s price actions from 8908.82 are viewed as a sideway consolidation pattern only. Larger up trend is expected resume through 8908.82 to 100% projection of 7404.08 to 8474.41 from 8002.34 at 9072.67 at a later stage.

    As for the stronger DAX, outlook is staying bullish with 22226.34 support intact, which is close to 55 D EMA (now at 22150.63). Another rise is till expected to 161.8% projection of 14630.21 to 18892.92 from 17024.82 at 23921.87, or even further to 24000 psychological level.

    It’s also important for EUR/USD. The near term pull back from 1.0953 could have already completed at 1.0731, ahead of 38.2% retracement of 1.0358 to 1.0953 at 1.0726. Break of 1.0857 minor resistance should affirm this bullish case, and push EUR/USD through 1.0953 to resume the whole rally from 1.0176.

    More significantly, the next rally would set up EUR/USD for a test on key resistance between 1.1274 (2023 high) and multi-decade falling channel resistance (now at around 1.1380). This resistance zone is crucial to determine whether EUR/USD is reversing the long term down trend.

    USD/JPY Weekly Outlook

    USD/JPY recovered further to 151.20 last week but retreated sharply ahead of 151.29 cluster resistance (38.2% retracement of 158.86 to 146.52 at 151.23). Initial bias remains neutral first and outlook stay bearish. On the downside, below 149.53 minor support will argue that the corrective recovery has completed and bring retest of 146.52 low. Firm break there will resume whole fall from 158.86. However, firm break of 151.23/9 will turn bias back to the upside for 154.79 resistance instead.

    In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low), with fall from 158.86 as the third leg. Strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

    In the long term picture, it’s still early to conclude that up trend from 75.56 (2011 low) has completed. A medium term corrective phase should have commenced, with risk of deep correction towards 55 M EMA (now at 136.94).



    Source link

  • Global Trends Hit Pause, Consolidations to Follow Until Trump’s Liberation Day

    Global Trends Hit Pause, Consolidations to Follow Until Trump’s Liberation Day


    The dominant trends that shaped Q1 in global markets appear to have run their course, with most major assets entering consolidation phase last week.

    US stocks staged a mild recovery from steep selloff since mid-February, but upside momentum was notably weak. Meanwhile, Dollar, which had been under pressure throughout March, appeared to find a near-term bottom. Resilience of hard economic data in the US somewhat offset persistent concerns over trade disruptions.

    In Europe, Euro and German DAX also lost steam. Optimism over Germany’s historic EUR 500B infrastructure and defense spending plan helped fuel a strong rally earlier in the month, but now traders are starting to price in political and implementation challenges ahead.

    In Asia, sentiment toward China has been broadly positive in recent weeks, driven by policy support and hope for a consumer-led recovery. However, the rally in Hong Kong stocks, in particular, appears stretched.

    Even Gold, after a powerful run to record highs, is struggling to overcome a key medium-term resistance zone.

    What ties these developments together is a growing sense of caution ahead of the highly anticipated reciprocal tariffs set to be unveiled on April 2.

    Market participants remain wary, especially after US President Donald Trump described the date as America’s “liberation day.” His mixed messaging on potential “flexibility” in applying the tariffs — while simultaneously rejecting carveouts — only adds to the confusion and uncertainty.

    In this environment, broad-based risk appetite is likely to stay subdued. While tariff concerns may cap further upside in stocks and restrain Dollar’s rebound, traders are unlikely to make aggressive moves until more clarity emerges in early April.

    For the week, Swiss Franc led the performance chart, followed by Canadian Dollar and the Greenback. Aussie was the weakest, followed by Euro and Yen, while Kiwi and Sterling ended in the middle of the pack.

    Fed Sparks Brief Moves, Markets Consolidate Ahead of April Tariff Showdown

    US stock markets saw a brief bounce following Fed’s decision to keep interest rates unchanged and maintain the median outlook for two rate cuts later this year. However, the optimism quickly faded, with major indexes settling back into their near-term ranges. Investors seemed to digest the Fed’s stance as largely expected, and without any significant surprises to break the prevailing sentiment stalemate.

    The updated Summary of Economic Projections (SEP) hinted at some cautious acknowledgment of the economic toll from trade war. GDP forecasts were revised lower across the board, particularly for 2025 at 1.7%, but remained anchored around Fed’s longer-run estimate of 1.8% growth by 2026 and 2027. On the inflation front, core PCE was nudged higher to 2.8% for this year, up from the previous 2.5%. But projections for 2026 and 2027 held steady at 2.2% and 2.0% respectively.

    Overall, the projections suggest that while tariffs may impact near-term economy activity, Fed sees no long-term deviation from trend growth. Also, Fed expects the inflationary pressure from tariffs to be “transitory”, fading after the initial pass-through period.

    Still, the assumption remains a fragile one. With President Donald Trump’s sweeping reciprocal and sectoral tariff plans due for rollout on April 2, markets are bracing for more clarity—or chaos. The lack of concrete detail on implementation leaves room for policy whiplash, adding to the uncertainty businesses and consumers are already grappling with.

    For now, Fed fund futures imply an 88% chance of a rate cut in June, followed by around 70% odds of another cut in September. Still, those odds remain sensitive to upcoming inflation readings, consumer sentiment, and of course, any fresh headlines out of Washington on trade.

    Technically, DOW gyrated higher last week after forming a short term bottom at 40661.77 earlier in the month. The structure of the recovery so far suggests that it’s merely a corrective bounce. Further decline is expected as long as 55 D EMA (now at 43027.95) holds. Fall from 45054.36 is seen as corrective the whole up trend from 28660.94. On resumption, DOW should target 38.2% retracement of 28660.94 to 45054.36 at 38792.07.

    Similarly, NASDAQ turned sideway after forming a short term bottom at 17238.23. While stronger recovery cannot be ruled out, risk will stay on the downside as long as 55 D EMA (now at 18753.98) holds. Fall from 20204.58 is seen as a correction to the ups trend from 10088.82. Break of 17238.23 will target 38.2% retracement of 10088.82 to 20204.58 at 16340.36.

    Dollar Index should have formed a short term bottom at 103.19 and turned into consolidations already. Further recovery might be seen in the near term. But there would be strong resistance between 55 W EMA (105.21) and 55 D EMA (now at 105.91) to limit upside. Break of 103.19 will resume the fall from 110.17 to 99.57/100.15 support zone.

    Euro and DAX Enter Consolidation as Focus Shifts to German Coalition Talks

    Both Euro and German DAX may have peaked in the near term, as the initial optimism surrounding Germany’s sweeping fiscal expansion plan begins to fade. The EUR 500 B infrastructure and defense package, along with reforms to the long-standing debt brake rule, passed the Bundestag earlier in the week and was approved by the Bundesrat on Friday. With the legislative hurdles cleared, investor attention is now turning to the political process of implementing the plan.

    Chancellor-in-waiting Friedrich Merz is aiming to finalize a coalition with SPD by Easter, but the path forward is far from certain. Migration policy remains a key stumbling block. At the same time, Merz is already facing internal criticism from parts of his CDU/CSU bloc for what some see as an overly generous fiscal shift. These political frictions would be the uncertainty that could weigh on both sentiment and market performance in the coming weeks.

    Even in the absence of external risks like US tariffs, the timeline for tangible economic impact from the spending package remains distant. A regular budget for 2025 may not be passed until mid-year, meaning it could be months before new investments begin to support growth.

    A consolidation phase may now set in for German equities and Euro, lasting at least until Merz completes the coalition negotiations.

    Technically, while DAX still has some room to climb, considering bearish divergence condition in D MACD, upside will likely be limited by 161.8% projection of 14630.21 to 18892.92 from 17024.82 at 23921.87, or in short 24k mark. Break of 22226.34 support will suggest that a correction has started to digest the rally from 17024.82.

    EUR/USD should have completed a short term top at 1.0953 after last week’s pull back. Deeper fall might be seen to 38.2% retracement of 1.0358 to 1.0953 at 1.0726. But strong rebound is expected from there to set the range for a near term corrective pattern.

    China Optimism and HSI Rally Nears Exhaustion, Aussie at Risk

    After weeks of bullish sentiment toward China, markets in Asia may be poised for a meaningful correction. Much of the recent optimism was driven by Beijing’s ambitious “special action plan” to stimulate domestic consumption and the buzz surrounding AI startup DeepSeek. However, as attention shifts from announcements to implementation, investors are turning cautious on whether these initiatives will yield the hoped-for near-term growth.

    In particular, the rally in Hong Kong stocks appears increasingly stretched. HSI had made a strong push higher since January, but it’s now facing a tough hurdle at the psychologically significant 25,000 mark. That level also aligns closely 100% projection of 16964.28 to 23241.74 from 18671.49 at 24948.95. Combined with bearish divergence in daily MACD, there’s a rising risk that profit-taking could be triggered on any failure to break this resistance zone.

    Firm break of 23198.13 support would be a key signal that the rally has topped for the near term, opening the door for deeper pullback toward the 55 D EMA (now at 22302.72) or even below.

    Australian Dollar is especially vulnerable in this bearish scenario, given its strong trade ties with China. Sustained break of near term trend line support (now at 0.6251) will argue that consolidation pattern from 0.6087 has already completed. Further break of 0.6186 support will solidify bearish case and suggest that fall from 0.6941 is ready to resume.

    Gold Correction Looms With Rejection by Key Resistance Zone

    Gold’s impressive record run may have reached a near-term peak as it ran into a confluence of critical resistance zone. The levels include 61.8% projection of 2584.24 to 2956.09 from 2832.41 at 3062.21, and more importantly, medium-term rising channel resistance.

    Sustained break of 55 4H EMA (now at 2993.64) should confirm this view and bring deeper pull back to 2956.09 resistance turned support or a bit lower. But strong support should be seen from 55 D EMA (now at 2862.52) to contain downside, and bring rebound,, at least on first attempt.

    USD/CAD Weekly Outlook

    Range trading continued in USD/CAD last week and outlook is unchanged. Initial bias remains neutral this week first. Overall, price actions from 1.4791 are seen as a corrective pattern. On the upside, break of 1.4541 will extend the second leg from 1.4150 to retest 1.4791 high. On the downside, break of 1.4238 will argue that the third leg has already started through 1.4150 support.

    In the bigger picture, long term up trend is tentatively seen as resuming with prior breach of 1.4667/89 key resistance zone (2020/2015 highs). Next target is 100% projection of 1.2401 to 1.3976 from 1.3418 at 1.4993. This will remain the favored case as long as 1.3976 resistance turned support holds (2022 high), even in case of deep pullback.

    In the longer term picture, up trend from 0.9506 (2007 low) is in progress and possibly resuming. Next target is 61.8% projections of 0.9406 to 1.4689 from 1.2005 at 1.5270. While rejection by 1.4689 will delay the bullish case, further rally will remain in favor as long as 55 M EMA (1.3463) holds.



    Source link

  • Currency Markets Consolidate as Trader Start Repositioning for Tariff Battles in April

    Currency Markets Consolidate as Trader Start Repositioning for Tariff Battles in April


    The past week in the currency markets was marked more by consolidation than decisive moves, even as risk aversion deepened in US stock markets. Dollar’s selloff slowed and turned into a modest recovery, but there was no clear momentum for bullish trend reversal. Sentiment remained fragile, weighed down by constantly escalating trade tensions and the growing impact of tariffs on American consumer and business confidence. However, with stocks and Dollar both looking oversold, markets appear to have found a temporary reprieve, allowing for some short-term stabilization.

    That said, this pause does not indicate a shift in sentiment, but rather reflects a phase of profit-taking and repositioning. Traders seem to be adjusting their positions ahead of the critical tariff showdown in April, when reciprocal trade measures on key US trading partners are expected to take effect. As markets brace for the next wave of developments, uncertainty and indecisiveness have become dominant themes. This is evident in the fact that only three currency crosses closed outside their prior week’s ranges, highlighting a lack of conviction in directional moves.

    Among the currency performers, New Zealand Dollar overtook Euro at last hours as the week’s strongest, but its gains lacked clear momentum for a sustained uptrend. Australian Dollar, which came in third, and Kiwi appeared to be mostly digesting their recent losses, aided by a modest stabilization in risk sentiment.

    While these currencies showed some resilience, they have yet to break out of their broader downtrends, and further gains will likely depend on how global markets react to the next round of trade developments.

    Euro, despite slipping to second place, could soon regain momentum, especially as Germany’s major political parties reached a breakthrough on a historic debt deal.

    On the weaker side, Japanese Yen, Swiss Franc, and Dollar ranked as the bottom three performers. Meanwhile, Sterling and Canadian Dollar closed the week in the middle of the pack

    Stocks Sink for the Week Despite Friday’s Rebound, April Set to Be Crucial

    US stocks suffered significant losses last week, with DOW plummeting -3.1% for its worst weekly performance since March 2023. Both S&P 500 and NASDAQ also slipped more than -2% and notched their fourth consecutive week in the red. While a strong rebound on Friday briefly lifted spirits—becoming the best single day of 2025 for S&P 500 and NASDAQ—these gains were insufficient to salvage the broader downtrend that has gripped the market.

    Friday’s bounce appeared to be more of a technical rebound than a shift in fundamentals. With the major indices down 10% from their all-time highs, markets had reached oversold conditions, making them ripe for short traders to take profits. However, the broader narrative remains bearish, at least for the near term. .

    Tariff uncertainties will continue to cap upside momentum in stocks, at least through April. The critical turning point would come on April 2, when reciprocal tariffs from US are set to be announced. The corresponding retaliatory measures from the European Union, Canada, China, and Japan—and the potential for further US escalation in response—will dictate how deep the economic impact may run. The developments in the second quarter will ultimately determine whether the US markets are in merely a medium-term correction or entering an outright bear market.

    For S&P 500, fall from 6147.43 is currently seen as a correction to the up trend from 3491.58 (2022 low) only. While further decline remains in favor, downside should be contained by 38.2% retracement of 3491.58 to 6147.43 at 5132.89.

    However, firm break of 5132.89 will raise the chance of long term reversal, and target trend line support (now at around 4740).

    Similarly, DOW should now be in correction to the whole rally from 28660.94 (2022 low). While further fall is expected, downside should be contained by 38.2% retracement of 28660.04 to 45703.63 at 38803.98. However, sustained break of this fibonacci level will argue that larger scale reversal is underway.

    Dollar Index May Stabilize Around 61.8% Retracement Level, But Downside Risks Remain

    The sharp decline in Dollar Index slowed last week, as market expectations for Fed’s next rate cut have shifted back from May to June. Despite softer-than-expected consumer inflation data, traders are acknowledging that Fed will likely need more time to assess the economic impact of escalating tariffs before making a policy move.

    June FOMC meeting offers the central bank a broader window to evaluate the full effects of reciprocal trade measures and any additional retaliatory tariffs. Additionally, Fed will have a fresh set of economic projections by then, providing a more comprehensive view of inflation, growth, and labor market trends.

    Technically, Dollar Index is now hovering around 61.8% retracement of 99.57 to 110.17 at 103.61. This level could provide some short-term stabilization, particularly as D RSI also suggests oversold conditions. Some consolidations might follow first, or even a notable recovery.

    However, risks will continue to stay on the downside as long as 55 D EMA (now at 106.37) holds. Sustained break of 103.61 will extend the fall from 110.17 to 99.57 low (2023 low).

    Eurozone Confidence Surges, DAX and Euro Poised for Further Gains

    Euro and Germany’s DAX lost some momentum last week, but Friday’s bounce suggests both may be gearing up to extend their recent rallies.

    In a major political breakthrough, Chancellor-in-waiting Friedrich Merz announced on Friday that he had secured the backing of the Greens for a massive increase in state borrowing. With support from the Social Democrats already in place, Merz now has the two-thirds parliamentary majority required to pass constitutional amendments.

    The highly anticipated vote is scheduled for next week and, if approved, would mark a historic shift in Germany’s fiscal policy, paving the way for significant infrastructure and defense spending.

    Merz’s declaration that “Germany is back” highlighted the renewed optimism surrounding both the German and broader European economies.

    This growing confidence is also reflected in recent sentiment indicators. Eurozone Sentix Investor Confidence Index surged from -12.7 to -2.9 in March, reaching its highest level since June 2024. More notably, Expectations Index skyrocketed from 1.0 to 18.0, marking its third consecutive monthly increase and the highest level since July 2021. This surge represents the largest monthly improvement since 2012.

    Germany’s investor confidence has also rebounded sharply, signaling a significant turnaround in market expectations. The German Sentix Investor Confidence Index jumped from -29.7 to -12.5, its strongest level since April 2023. Meanwhile, the Expectations Index surged from -5.8 to 20.5, reaching its highest point since July 2021.

    For DAX, near term outlook stays bullish with 22226.34 support intact. Current trend should continue to 161.8% projection of 14630.21 to 18892.92 from 17024.82 at 23921.87. Decisive break there would pave the way to 200% projection 25550.22 next.

    Nevertheless, rejection by 23921.87 will indicate medium term topping, on bearish divergence condition in D MACD. DAX should then turn into consolidations, until fresh catalyst pushes it through to new records.

    The key for Euro remains on whether EUR/CHF could decisively break through the long term channel resistance to solidify its bullish trend reversal. In this case, stronger rally should be seen to 0.9928 resistance at least.

    However, break of 0.9489 support will suggest rejection by the channel resistance, and keep outlook bearish for EUR/CHF, which might also be an indication of Euro’s outlook elsewhere.

    NZD/JPY as a Top Gainer, But Bearish Trend Remains Intact

    NZD/JPY was among the top-performing currency pairs last week, rising by over 1.1%. However, the crosses continued to trade within falling channel that originated from 92.45 high. It’s also capped well below 55 D EMA (now at 86.45).

    Thus, while the current rebound signals some near-term buying interest, the broader technical picture remains bearish.

    On the upside, NZD/JPY could face strong resistance from 86.71 (38.2% retracement of 92.45 to 83.14 at 86.96). Only a firm break of this cluster resistance zone would confirm bullish trend reversal.

    Otherwise, fall from 92.45 is still in favor to continue. Indeed, firm break of 83.02 (2024 low) will resume whole down trend from 99.01 (2024 high).

     

    USD/JPY Weekly Outlook

    USD/JPY edged lower to 146.52 last week but recovered since then. Initial bias remains neutral this week for more consolidations. Upside of recovery should be limited by 150.92 support turned resistance. On the downside, sustained trading below 61.8% retracement of 139.57 to 158.86 at 146.32 will pave the way to 139.57 support.

    In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low), with fall from 158.86 as the third leg. Strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

    In the long term picture, it’s still early to conclude that up trend from 75.56 (2011 low) has completed. A medium term corrective phase should have commenced, with risk of deep correction towards 55 M EMA (now at 136.88).



    Source link

  • A Multi-Decade Trend Reversal Underway in EUR/USD?

    A Multi-Decade Trend Reversal Underway in EUR/USD?


    The sharp contrast between Europe’s newfound unity and the ongoing tariff chaos in the US has been a defining theme in the financial markets. Euro’s extraordinary strength last week reflected growing investor confidence in the region’s strategic shift toward fiscal expansion and defense spending. From the formation of the “Coalition of the Willing” to the ReArm Europe initiative, they highlighted a strong, coordinated response to challenges, be it geopolitical or economic. That could set the stage for a long-term structural shift in European markets.

    Meanwhile, the US continued to grapple with trade policy uncertainty, with tariffs now more seen as a drag on sentiment and economic growth rather than a source of inflationary pressure. The recent exemptions granted to Canada and Mexico only reinforced the perception of inconsistency in Washington’s trade strategy. The lack of clarity on future policy moves has started to weigh on investor sentiment. That, if persists, could lead to a outflow of capital from the US and weakening the Dollar further.

    From a technical points of view, EUR/USD has shown clear signs of a potential long-term bullish reversal. The pair’s strong surge last week suggests that the multi-year downtrend may have bottomed out, with further upside potential if Europe successfully executes its ambitious fiscal and defense spending plans. However, challenges remain, including implementation risks and the broader impact of trade tensions on European exports.

    Currency market performance last week reflected the shifting sentiment. Euro ended as the strongest performer, followed by Sterling and Swiss Franc, which also benefited from Europe’s renewed economic confidence.

    On the other hand, Dollar closed as the worst performer, struggling under the weight of investor skepticism and diminishing safe-haven appeal. Elsewhere, Canadian Dollar and Australian Dollar also underperformed, indicating that risk-off sentiment remains present, particularly in the US. Yen and Kiwi positioned themselves in the middle of the performance spectrum.

    Europe’s Bold Shift Ignites Market Optimism

    Last week brought a seismic shift in Europe’s geopolitical, defense, and fiscal policies. In a move not seen in decades, the region is asserting greater strategic independence while ramping up economic stimulus. The changes were embraced by investors with enthusiasm, fueling rallies in European assets, particularly in Euro and German equities.

    Euro surged 4.4% against Dollar, its best weekly performance since 2009. Meanwhile, Germany’s 10-year yield posted its biggest jump since the fall of the Berlin Wall. DAX hit fresh record highs, with cyclical and defense-related stocks leading the charge.

    At the heart of this shift is the “ReArm Europe” initiative, which commits the EU to a significant defense buildup. European Commission President Ursula von der Leyen has proposed mechanisms to mobilize up to EUR 800B in special funds. This landmark decision not only strengthens military readiness, but also reduces reliance on external allies.

    Further reinforcing this new direction, EU leaders took a bold stand against Hungarian Prime Minister Viktor Orbán, overriding his veto on aid to Ukraine. In an unusual move, member states issued a separate statement reaffirming their unified support for Kyiv.

    Meanwhile, in Germany, despite ongoing coalition talks, CDU leader Friedrich Merz wasted no time aligning with the SPD to push for loosening of the “debt brake”, which would unlock EUR 500B for infrastructure projects. Additionally, defense spending above 1% of GDP will be permanently exempt from fiscal constraints. Over the next decade, these measures could increase government spending by a staggering 20% of GDP. The scale surpasses even that seen after German reunification in the 1990s.

    This massive fiscal shift in Germany carries significant upside potential for both domestic and Eurozone growth. With a sharp boost in public spending, it could also act as a buffer against potential US tariffs. For years, European growth has been held back by fiscal conservatism—but now, these bold new policies could reshape the region’s economic future for years to come.

    Technically, DAX might be rebuilding upside momentum as seen in D MACD. Current up trend should head to take on 161.8% projection of 14630.21 to 18892.92 from 17024.82 at 23921.87. Decisive break there would target 200% projection at 25550.22 next. Nevertheless, firm break of 22226.34 support will suggest DAX has topped for the near term at least, and consolidations should follow first.

    Is Euro Entering a Long-Term Bull Cycle?

    As Europe embarks on a new era of fiscal expansion and policy coordination, Euro’s looks well-positioned for a prolonged rally and with prospects of long term bullish trend reversal.

    Another key factor supporting Euro is the growing belief that ECB is nearing a pause in its policy easing cycle. With monetary policy now “meaningfully less restrictive”, as described by President Christine Lagarde, a pause could start as soon as in April. ECB could opt for a wait-and-see approach, to assess how trade policy, fiscal initiatives, and broader geopolitical risks play out.

    However, key risks remain, including escalation in trade disputes with the US, as well as how effectively Europe executes its ambitious spending plans. The coming months will be crucial in determining whether this historic shift translates into sustained economic momentum or if internal and external headwinds slow down the Euro’s resurgence.

    Technically, EUR/USD’s strong rally suggests that fall from 1.1274 (2023 high) has completed as a correction, with three waves down to 1.0176. Firm break of 1.1274 would resume larger rally from 0.9534 (2022 low), to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916.

    More significantly, if the bullish case is realized, that would push EUR/USD through the two-decade falling channel resistance, which could be an important sign of long term trend reversal.

    US Stocks at Risk of Bearish Trend Reversal Amid Tariff Chaos

    US stocks endured a turbulent week as investors wrestled with the unpredictable nature of President Donald Trump’s trade policies. The volatility has taken a clear toll on market sentiment, with technical indicators increasingly pointing to bearish trend reversal in major indexes. The coming weeks could prove decisive in determining whether the strong uptrend that has defined the past few months has reversed or if equities can regain their footing.

    S&P 500 logged its worst week since September, falling -3.1%, while DOW dropped -2.4%. NASDAQ was hit hardest, tumbling -3.5%.

    The implementation of 25% tariffs on Canadian and Mexican imports on March 4, had initially sent markets into a tailspin. However, Trump’s decision on Thursday to pause tariffs on USMCA-covered goods for another month only added to the confusion, as investors struggled to decipher the long-term direction of trade policy.

    This chaotic cycle of tariff imposition followed by temporary reversals has created an uncertain and fragile investment environment. Businesses remain hesitant to make forward-looking decisions, while consumer confidence is showing signs of strain. The erratic nature of US trade policy has left markets with little clarity, and the risk of further deterioration in sentiment remains high.

    Nevertheless, Friday’s non-farm payroll report provided some relief, as job growth remained near its recent average, unemployment stayed within its recent range, and wage growth held robust. The data suggested that, at least for now, the feared economic fallout from tariffs has not yet materialized in a meaningful way. However, lingering uncertainty around trade and global economic conditions continues to weigh on sentiment.

    Meanwhile, Fed Chair Jerome Powell reiterated on Friday that the central bank is in no rush to cut rates, stating that the Fed is “well-positioned to wait for clarity.” Powell’s cautious stance contrasts with growing market expectations for rate cuts, as investors bet on economic weakness forcing the Fed’s hand.

    While a hold in March remains the base case, with 88% odds, Fed fund futures now price in a 52% probability of a 25bps rate cut in May, up sharply from 33% a week ago and 26% a month ago. This suggests that investors are bracing for the possibility of further economic softening, with Fed being forced to act sooner than its current guidance suggests.

    Technically, DOW’s up trend should still be intact as long as 41844.89 support holds. However, firm break there will argues that it’s already in correction to the up trend from 28660.93 (2022 low). Sustained trading below 55 W EMA (now at 41332.86) will further solidify this bearish case. Next target will be 38.2% retracement of 28660.94 to 45087.75 at 38812.71.

    As for NASDAQ, it’s now pressing 55 W EMA (at 17878.67). Sustained break there will also indicate that it’s already correcting the up trend from 10088.82 (2022 low). Next target is 38.2% retracement of 10088.82 to 20204.58 at 16340.36.

    As for Dollar Index, last week’s steep decline and strong break of 55 W EMA (now at 105.31) argues that corrective pattern from 99.57 (2023 low) has completed with three waves up to 110.17. Near term risk will now stay on the downside as long as 55 D EMA (now at 106.91) holds. Further downside acceleration will raise the chance that Dollar Index is indeed resuming the whole down trend from 114.77 (2022 high) .

    While it’s still too early to confirm the bearish case, firm break of 100.15 support could set up further medium term fall to 100% projection of 114.77 to 99.57 from 110.17 at 94.97.

    The challenge for Dollar is that risk aversion no longer seems to be offering support. Tariffs are providing little help unlike what it did this year. Meanwhile, Fed appears poised to resume rate cuts sooner than expected. With these factors in play, it’s unclear what could drive a rebound for the greenback, other then implosion of Euro and other currencies

    EUR/CHF Weekly Outlook

    EUR/CHF surged to as high as 0.9634 last week but faced strong resistance from long term falling channel and retreated. Initial bias stays neutral this week first and some more consolidations could be seen. Further rally will be expected as long as 55 4H EMA (now at 0.9467) holds. On the upside, above 0.9634, and sustained trading above 0.9651 fibonacci level will pave the way back to 0.9928 key resistance next.

    In the bigger picture, the strong break of 55 W EMA (now at 0.9482) is a medium term bullish sign. Sustained break trading above long-term falling channel resistance (at around 0.9620) would suggest that the downtrend from 1.2004 (2018 high) has bottomed at 0.9204. Stronger rally should then be see to 0.9928 key resistance at least.

    In the long term picture, bullish signs are emerging. However, the important hurdle at 0.9928 resistance, which is close to 55 M EMA (now at 0.9960), is needed to be taken out decisively before considering long term trend reversal. Otherwise, outlook is neutral at best.



    Source link

  • Euro and DAX Surge on German Spending Boost, Dollar Struggle Continues after Poor ADP

    Euro and DAX Surge on German Spending Boost, Dollar Struggle Continues after Poor ADP


    Investor sentiment in Europe is exceptionally upbeat today, with German stocks leading the rally as DAX surges over 3%, breaking above the 23k mark. Euro also rallies across the board with solid momentum, with help from rise in Germany’s benchmark yield, the overall positive sentiment, as well as a struggling Dollar.

    The boost to European sentiment was driven by the announcement that Germany’s two biggest parties, CDU/CSU and SPD, have agreed to overhaul borrowing rules to expand defense and infrastructure spending. More importantly, they are accelerating these investment plans rather than waiting out a lengthy coalition-building process. This commitment to boosting government spending is seen as a significant stimulus for the German economy, which has been struggling with recession.

    The prospect of higher public investment in Europe stands in stark contrast to the growing uncertainty surrounding the US economy. The latest ADP jobs report significantly missed expectations. The report cited policy uncertainty and slowing consumer spending as key factors behind the hiring slowdown. Focuses are now on Friday’s non-farm payrolls report, which could further cement concerns over a softening U.S. labor market.

    At the same time, the tariff situation remains highly fluid, with reports indicating that the Trump administration is considering exemptions for Canadian and Mexican products that comply with USMCA trade rules. However, no official confirmation has been made, leaving uncertainty over trade policy still hanging over the markets.

    In the currency markets, Euro is leading the pack as the strongest performer of the day, followed by Japanese Yen and New Zealand Dollar. Dollar remains the weakest, with Canadian Dollar also underperforming, followed by Swiss Franc. British Pound and Australian Dollar are positioned in the middle of the pack.

    Technically, an immediate focus is on 0.9516 resistance in EUR/CHF. Firm break above this level would confirm resumption of rebound from 0.9204. More significantly, it would also strengthen the case that the downtrend from 0.9928 (2024 high) is reversing. In this case, EUR/CHF should target 100% projection of 0.8204 to 0.9516 from 0.9331 at 0.9643 next.

    In Europe, at the time of writing, FTSE is up 0.37%. DAX is up 3.42%. CAC is up 2.05%. UK 10-year yield is up 0.118 at 4.619. Germany 10-year yield is up 0.219 at 2.713. Earlier in Asia, Nikkei rose 0.23%. Hong Kong HSI rose 2.84%. China Shanghai SSE rose 0.53%. Singapore Strait Times rose 0.20%. Japan 10-year JGB yield rose 0.020 to 1.446.

    US ADP jobs grow only 77, hiring slowdown

    US private sector employment growth slowed sharply in February, with ADP reporting an increase of just 77k jobs, far below market expectations of 140k.

    The breakdown showed that goods-producing sectors contributed 42k jobs, while service-providing sectors added only 36k. By company size, small businesses shed -12k jobs, while medium-sized firms led hiring with a 46k gain, followed by large businesses with a 37k increase.

    Wage growth showed little change, with job-changers seeing annual pay gains slow slightly from 6.8% to 6.7%, while job-stayers remained steady at 4.7%.

    ADP’s chief economist Nela Richardson attributed the hiring slowdown to “policy uncertainty and a slowdown in consumer spending,” which may have prompted layoffs or cautious hiring.

    Eurozone PPI up 0.8% mom 1.8% yoy in Jan, above expectations.

    Eurozone producer prices rose sharply by 0.8% mom and 1.8% yoy in January, exceeding expectations of 0.3% mom and 1.4% yoy, respectively.

    The monthly increase in Eurozone PPI was primarily driven by a 1.7% mom jump in energy prices, while capital goods and durable consumer goods also saw notable gains of 0.7% mom and 0.6%, respectively. Intermediate goods prices edged up by 0.3% mom, while non-durable consumer goods saw a modest 0.2% mom rise.

    The broader EU also recorded a 0.8% mom, 1.8% yoy in producer prices. Among individual member states, Ireland saw the largest monthly price jump at 6.2%, followed by Bulgaria (+5.4%) and Sweden (+2.3%).

    However, not all countries experienced inflationary pressures, as Portugal (-2.2%), Austria (-0.6%), Slovenia (-0.5%), and Cyprus (-0.3%) registered price declines.

    Eurozone PMI composite finalized at 50.2, barely grow for two months

    Eurozone economy showed little momentum in February, with PMI Services finalizing at 50.6, down from 51.3 in January, while PMI Composite was unchanged at 50.2.

    The picture was mixed across the region with Spain, Ireland, and Italy showing signs of expansion, while Germany’s services sector slowed and France’s continued its sharp contraction, posting its lowest reading in 13 months at 45.1.

    Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, noted that services growth is barely offsetting the prolonged slump in manufacturing. He pointed to rising input costs, particularly wage pressures, as a growing concern for ECB.

    Political uncertainty in key economies is also weighing on sentiment. France’s services sector is deteriorating at a much faster pace, likely influenced by unresolved political instability. In contrast, Germany’s services sector, though slowing, remains in expansion, with hopes that post-election stability could support economic recovery.

    However, with external risks from trade tensions and weak consumer spending, a decisive rebound in Eurozone remains uncertain.

    UK PMI services finalized at 51, stagflation risks grow

    The UK services sector showed little improvement in February, with PMI Services finalized at 51.0, slightly up from January’s 50.8 but still well below its long-run average of 54.3. Meanwhile, PMI Composite edged lower from 50.6 to 50.5, signaling stagnant overall economic activity as demand conditions continue to weaken both domestically and in export markets.

    Tim Moore, Economics Director at S&P Global Market Intelligence, warned of “elevated risk of stagflation on the horizon”. New orders falling at their sharpest rate in over two years. Rising payroll costs and economic uncertainty have eroded business confidence, bringing sentiment to its lowest level since December 2022.

    Concerns over slowing growth and persistent inflation pressures have also led to continued job losses, with employment in the services sector contracting for a fifth straight month—the longest period of decline outside of the pandemic since early 2011.

    Swiss annual CPI ticks down to 0.3% yoy, remains weak

    Swiss inflation accelerated on a monthly basis in February, with CPI rising 0.6% mom, slightly above the expected 0.5%. Core CPI, which excludes fresh and seasonal products, energy, and fuel, increased by 0.7% mom. The rise was driven by both domestic and imported product prices, which climbed 0.5% mom and 0.9% mom, respectively.

    However, the broader inflation trend remains subdued. On a year-over-year basis, headline CPI slowed to 0.3% yoy from 0.4% yoy, though it was still slightly above expectations of 0.2% yoy. Core CPI remained steady at 0.9% yoy. While domestic product price inflation eased from 1.0% yoy to 0.9% yoy, imported prices continued to contract, staying at -1.5% yoy.

    BoJ’s Uchida: Interest rate to gradually approach neutral by late FY 2025 to FY 2026

    BoJ Deputy Governor Shinichi Uchida reinforced today that interest rates will continue to rise if the bank’s economic projections hold. He highlighted in a speech that BoJ expects inflation to stabilize around the 2% target in the second half of fiscal 2025 to fiscal 2026, with “effects of the cost-push wane” while underlying inflation strengthens with wages growth.

    “The policy interest rate at that time is considered to approach an interest rate level that is neutral to economic activity and prices,” he added.

    However, Uchida acknowledged that determining the “neutral” interest rate level remains uncertain. While in theory, it should be around 2% plus Japan’s natural rate of interest, estimates for the latter vary significantly from -1% to +0.5%.

    Given this wide range and estimation errors, BoJ will avoid relying solely on theoretical models and instead “examine the response of economic activity and prices as it raises the policy interest rate”

    Japan’s PMI service finalized at 53.7, sector strengthens but confidence wanes on labor shortages and trade risks

    Japan’s PMI Services was finalized at 53.7 in February, up from January’s 53.0, marking a six-month high. PMI Composite also improved from 51.1 to 52.0, the strongest reading since September 2024.

    According to Usamah Bhatti, Economist at S&P Global Market Intelligence, service sector businesses saw higher sales volumes, with export demand contributing to the expansion. Meanwhile, the broader private sector recorded its steepest rise in activity in five months, supported by a milder contraction in manufacturing.

    Despite the growth, overall business confidence showed signs of softening. Bhatti noted Firms expressed concerns over labor shortages and uncertainty stemming from US trade policies, leading to the weakest sentiment since January 2021.

    RBA’s Hauser: Uncertain on further easing disputes market’s rate-cut outlook

    RBA Deputy Governor Andrew Hauser emphasized in a speech today that monetary policy is set to ensure inflation returns to the midpoint of the target range, which is crucial for maintaining price stability over the long run.

    He justified the February rate cut, stating that it “reduces the risks of inflation undershooting that midpoint.”

    However, Hauser pushed back against market expectations of a sustained easing cycle, saying the “Board does not currently share the market’s confidence that a sequence of further cuts will be required”.

    While Hauser acknowledged that interest rates will go where they need to go to balance inflation control with full employment, he made it clear that progress so far does not warrant complacency.

    He stressed that RBA will continue to assess economic developments on a “meeting by meeting” basis.

    Australia’s GDP grows 0.6% qoq in Q4, ending per capita contraction streak

    Australia’s GDP grew by 0.6% qoq in Q4, exceeding expectations of 0.5% qoq, while annual growth stood at 1.3% yoy. A key highlight was the 0.1% qoq per capita GDP growth, marking the first increase after seven consecutive quarters of contraction.

    According to Katherine Keenan, head of national accounts at the ABS, “Modest growth was seen broadly across the economy this quarter.” She noted that both public and private spending contributed positively, alongside a rise in exports of goods and services.

    China’s Caixin PMI services rises to 5.14, but uncertainties rising in employment and income

    China’s Caixin Services PMI climbed to 51.4 in February, up from 51.0, beating market expectations of 50.8. Composite PMI also improved slightly to 51.5, signaling steady expansion across both manufacturing and services for the 16th consecutive month.

    According to Wang Zhe, Senior Economist at Caixin Insight Group, supply and demand showed improvement in both sectors, supported by robust consumption during the Chinese New Year holiday and technological innovations in select industries. However, “employment saw a slight contraction”, mainly due to weakness in the manufacturing sector.

    Concerns remain over China’s broader economic recovery. Wang noted that overall price levels “remained subdued”, with declining sales prices in both manufacturing and services. “Rising uncertainties in employment and household income constraining efforts to boost domestic demand and stabilize the economy,” he added.

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.0522; (P) 1.0575; (R1) 1.0679; More…

    EUR/USD accelerates further higher today and met 100% projection of 1.0176 to 1.0531 from 1.0358 at 1.0173 already. There is no sign of topping yet. Intraday bias stays on the upside for 161.8% projection at 1.0932 next. On the downside, below 1.0636 minor support will turn intraday bias neutral again first.

    In the bigger picture, the strong rebound from 61.8 retracement of 0.9534 (2022 low) to 1.1274 (2024 high) at 1.0199 argues that fall from 1.1274 might be a correction only. Sustained trading above 55 W EMA (now at 1.0668) should indicate that this correction has already completed with three waves down to 1.0176. Rise from 0.9534 (2022 low) might then be ready to resume through 1.1274. Nevertheless, rejection by 55 W EMA would keep outlook bearish for another fall through 1.0176 at a later stage.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    00:30 AUD GDP Q/Q Q4 0.60% 0.50% 0.30%
    00:30 JPY Services PMI Feb F 53.7 53.1 53.1
    01:45 CNY Caixin Services PMI Feb 51.4 50.8 51
    07:30 CHF CPI M/M Feb 0.60% 0.50% -0.10%
    07:30 CHF CPI Y/Y Feb 0.30% 0.20% 0.40%
    08:50 EUR France Services PMI Feb F 45.3 44.5 44.5
    08:55 EUR Germany Services PMI Feb F 51.1 52.2 52.2
    09:00 EUR Eurozone Services PMI Feb F 50.6 50.7 50.7
    09:30 GBP Services PMI Feb F 51 51.1 51.1
    10:00 EUR Eurozone PPI M/M Jan 0.80% 0.30% 0.40% 0.50%
    10:00 EUR Eurozone PPI Y/Y Jan 1.80% 1.40% 0% 0.10%
    13:15 USD ADP Employment Change Feb 77K 140K 183K 186K
    13:30 CAD Labor Productivity Q/Q Q4 0.60% 0.30% -0.40% 0.10%
    14:45 USD Services PMI Feb F 49.7 49.7
    15:00 USD ISM Services PMI Feb 53 52.8
    15:00 USD Factory Orders M/M Jan 1.50% -0.90%
    15:30 USD Crude Oil Inventories 0.6M -2.3M
    19:00 USD Fed’s Beige Book

     



    Source link

  • Dollar at Crossroads: Rebound Possible, But Bearish Risks Intensify

    Dollar at Crossroads: Rebound Possible, But Bearish Risks Intensify


    Dollar closed the week broadly lower, with the only exception being its slight gains against the even weaker Yen. Risk-on sentiment dominated global markets, fueling strong rallies in equities across the US, Europe, and Hong Kong, which in turn kept the greenback under pressure.

    The greenback had previously enjoyed a tariff-driven boost earlier in the month, but that narrative has largely unwound following the delay in implementing reciprocal tariffs. This shift has more than offset growing expectations that Fed will maintain a prolonged pause in rate cuts.

    Dollar Index is now at a critical technical juncture. A bounce from current levels is possible. However, if risk-on sentiment persists and intensifies, deeper pullback could materialize, with risk of leading to bearish trend reversal.

    While Dollar’s outlook appears increasingly vulnerable, other major currencies are struggling to establish clear directions. Most non-dollar pairs and crosses ended the week within their prior ranges, reflecting a lack of conviction among traders.

    Euro emerged as the strongest performer. Sterling followed behind, and then Aussie. On the weaker side, Yen underperformed the most, Dollar and Loonie followed in the lower tier. Swiss franc and Kiwi ended in middle positions.

    S&P 500 Nears Record as Markets Welcome Reciprocal Tariff Delay

    Investor sentiment in the US was broadly positive with major stocks indexes closing the week higher. S&P 500 even surged to just below its record high. Fed’s pause in its policy easing cycle is likely to continue for an extended period, but the market seems unfazed. Instead, focuses were on robust economic fundamentals and easing immediate tariff risks.

    A key driver of the upbeat mood is US President Donald Trump’s plan for reciprocal tariffs, which, for the moment, lacks immediate enforcement. The administration has pledged to investigate and develop country-specific tariffs by April 1 under the guidance of Commerce Secretary. That would potentially provide ample time for negotiations and compromises with major trading partners. As a result, immediate trade disruptions appear unlikely, prompting relief in equity markets.

    Meanwhile, Fed Chair Jerome Powell reiterated in his semiannual testimony to Congress that the central bank is in “no hurry” to cut interest rates again. Market participants have largely adjusted their expectations for the next Fed rate cut, now anticipating it more likely in the second half of the year rather than the first.

    Powell’s message also aligns with the data: January’s CPI and core CPI both accelerated, and PPI also exceeded expectations, indicating that price pressures may still be lingering. These figures support the Fed’s decision to maintain a restrictive rate stance until inflation shows more convincing signs of moderating. Meanwhile, disappointing January retail sales figures indicates slower pace of consumer spending, and Fed is unlikely needed to revert to tightening to curb inflation.

    Technically, S&P 500 should be ready to resume its long term up trend. Further rise is expected as long as 6003.00 support holds. Next near term target is 61.8% projection of 5119.26 to 6099.97 from 5773.31 at 6379.38.

    A larger question looms over whether S&P 500 can decisively break through long-term rising channel resistance (now around 6436). If it manages to do so, it could trigger medium-term acceleration 138.2% projection of 2191.86 to 4818.62 from 3491.58 at 7121.76.

    DAX Surges to New Highs as Hopes for Ukraine Ceasefire Lift Sentiment

    European markets staged an even stronger robust rally last week, with investors embracing a wave of optimism fueled by delayed US tariffs and renewed hopes of stability on the geopolitical front, with expectations for steady, gradual rate cuts from ECB in the background.

    The pan-European STOXX 600 index chalked up its eighth consecutive week of gains—its longest winning streak since Q1 2024—and hit a fresh intra-week record.

    One critical boost to confidence is the possibility that negotiations to end the war in Ukraine might soon begin. US President Donald Trump confirmed that he has held discussions with Ukrainian President Volodymyr Zelensky and Russian President Vladimir Putin, signaling that negotiations to end the war will begin immediately. Such a resolution could not only stem the loss of life but also reignite investment in the region, delivering a strong catalyst for further economic expansion across Europe.

    A cessation of hostilities in Ukraine would likely pave the way for significant investment programs, particularly in infrastructure and reconstruction. This influx of capital could be a tailwind for the manufacturing and industrial sectors throughout the EU, driving demand for goods and services.

    In Germany, DAX extended its record run with strong momentum. Near term outlook will stay bullish as long as 21759.97 support holds. Next target is 161.8% projection of 14630.21 to 18892.92 from 17024.82 at 23921.87.

    In the larger picture, DAX is clearly in an acceleration phase and could be targeting 161.8% projection of 8255.65 to 16290.19 from 11862.84 at 24862.73 before topping.

    Hong Kong Stocks Surge as China AI Optimism Builds

    Asian markets closed out the week with mixed performance, reflecting divergent regional drivers. Hong Kong’s HSI stole the show, and soared to a four-month high, underpinned by shifting investor sentiment toward a less aggressive US tariff policy and excitement around China’s tech sector.

    The Hong Kong market’s volatility was evident in the HSI’s deep profit-taking pullback on Thursday, followed by a strong 4% rebound on Friday—an indication of how quickly sentiment can swing once trade uncertainties eased with delay of Trump’s reciprocal tariffs.

    Another critical factor fueling the advance is the surge of optimism surrounding Chinese technology companies, particularly after the emergence of AI-related developments with DeepSeek.

    Unlike the brief recoveries seen last year, many analysts view the current run-up in Hong Kong’s equities as more than a short-lived, stimulus-driven bounce. They see a paradigm shift, with investors recognizing new opportunities in Chinese tech with prospect of long-term sector expansion.

    The result could be a stronger, more resilient rally that may endure longer than earlier bursts of optimism…. provided global trade tensions remain manageable.

    Technically, last week’s extended rise in HSI should confirm that correction from 23241.74 has completed at 18671.49 already. Near term outlook will stay bullish as long as 21070.05 resistance turned support holds. Firm break of 23241.74 will confirm resumption of whole medium term rise from 14794.16. Next target is 100% projection 16964.28 to 23241.74 from 18671.49 at 24948.95, which is close to 25k psychological level.

    In the bigger picture, the strong support from 55 W EMA is clearly a medium term bullish signal. It’s still way too early to confirm that whole long term down trend from 33484.08 (2018 high) has reversed. But even as a corrective move, rise from 14597.31 could extend to 61.8% retracement of 33484.08 to 14597.31 at 26269.33 before topping.

    Dollar at a Crossroads as Risk Sentiment Keeps Pressure On

    Dollar Index finds itself at a pivotal juncture following last week’s significant decline. A short-term bounce remains possible if the index can defend 38.2% retracement of 100.15 to 110.17 at 106.34. If strong support emerges at this point, it would reinforce the idea that recent price action is merely a consolidation pattern. That would keep the rally from 100.15 intact, setting the stage for an eventual break of 110.17 high.

    However, the growing appetite for risk across global markets could add additional weight on the greenback. Decisive break below the 106.34 support would deepen the correction to 55 W EMA (now at 105.23). Sustained break of 55 W EMA will argue that whole rise from 99.57 (2023 low) has already completed and a more significant trend reversal is underway.

    Compounding Dollar’s woes, U.S. Treasury yields have not offered the usual support. 10-year yield reversed quickly after briefly climbing to 4.660%. Even in a more optimistic scenario,10-year yield appears to be extending consolidation between the 4.809 high and 38.2% retracement of 3.603 to 4.809 from 4.348, leaving Dollar without a strong tailwind from the rates market.

    AUD/USD Weekly Report

    AUD/USD’s break of 0.6329 resistance last week indicates that rebound from 0.6087 is at least correcting the whole fall from 0.6941. Initial bias is now on the upside for 38.2% retracement of 0.6941 to 0.6087 at 0.6413. On the downside, however, break of 0.6234 support will suggest that the rebound has completed and bring retest of 0.6087 low.

    In the bigger picture, fall from 0.6941 (2024 high) is seen as part of the down trend from 0.8006 (2021 high). Next medium term target is 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.6516) holds.

    In the long term picture, prior rejection by 55 M EMA (now at 0.6846) is taken as a bearish signal. But for now, fall from 0.8006 is still seen as the second leg of the corrective pattern from 0.5506 long term bottom (2020 low). Hence, in case of deeper fall, strong support should emerge above 0.5506 to contain downside to bring reversal. However, this view is subject to adjustment if current decline accelerates further.



    Source link

  • Global Markets Look Beyond Trump’s Inauguration as Local Drivers Take the Lead

    Global Markets Look Beyond Trump’s Inauguration as Local Drivers Take the Lead


    Global markets are buzzing in anticipation of Donald Trump’s inauguration on January 20, yet the latest developments suggest investors may already be looking past the immediate impact. Despite speculation surrounding Trump’s policies—particularly tariffs—various benchmarks and asset classes are charting their own directions based on localized drivers and monetary policy expectations.

    In the US, the strong bounce in major stock indexes owes something to hopes of expansive fiscal stimulus under Trump. However, a significant portion of the rally can be traced to an improving inflation outlook and the view that Fed remains on track to further monetary easing. Additionally, the lack of significant concern over tariffs impacting inflation suggests that investors may not see Trump’s trade policies as an immediate threat to the US economy.

    Meanwhile record-breaking runs in FTSE and DAX signal distinct optimism. UK investors are banking on additional BoE easing after disappointing GDP, retail sales, and CPI data highlighted ongoing struggles. Germany’s DAX is supported by ECB’s dovish leanings as well as hopes of a political turnaround after snap elections in Germany in February. Market enthusiasm for Europe clearly isn’t driven by any expectation of beneficial tariffs; rather, local factors are in control.

    Japan, not a prime target of Trump’s tariff rhetoric, saw Nikkei weighed down by intensifying speculation about a looming Bank of Japan rate hike. This dynamic stands in sharp contrast to the overarching risk-on atmosphere elsewhere.

    In the currency markets, Yen emerged as the strongest performer last week, propelled by bets on BoJ action. Australian and New Zealand dollars followed suit, aided by the broader risk-on mood. On the weaker side of the spectrum, Canadian Dollar was the worst-performing currency, finally something reflecting potential vulnerability to Trump’s trade policies as BoC may have underestimated the economic risks posed by tariffs. Sterling also underperformed while Dollar was similarly subdued. Euro and Swiss Franc ended the week in middle positions.

    Risk Appetite Returns: DOW, S&P 500, NASDAQ End Week with Solid Gains

    Risk-on sentiment returned to US equity markets this week, with all three major indexes posting strong gains. DOW surged 3.69% for the week, S&P 500 rose 2.91%, and NASDAQ climbed 2.45%. Technically, the robust rebound eased fears of an imminent bearish reversal, affirming that recent pullbacks were likely just corrections within a broader uptrend.

    Market attention was drawn to Fed Governor Christopher Waller’s remarks at CNBC’s “Squawk on the Street”, interpreted by some as a dovish tilt. He expressed confidence that the inflationary stickiness seen in 2024 will begin to “dissipate” in 2025 and described himself as “more optimistic” about inflation than many of his Fed colleagues. Waller indicated the potential for three or four 25bps rate cuts this year, contingent on favorable inflation data.

    However, it should emphasized that Waller also tempered this optimism with caution, acknowledging that “If the data doesn’t cooperate, then you’re going to be back to two, maybe even one”.

    Waller left the door open for a rate cut in March, remarking that such a move “cannot be completely ruled out.” However, the message underlying was still consistent with market expectation that May or June might be more likely.

    Overall, despite the dovish interpretation by some, Waller’s comments suggest a flexible, data-dependent approach rather than a clear commitment to easing. The comments also largely aligned with market pricing.

    Nonetheless, inflation data for December did provide some relief. While, headline CPI rose from 2.7% to 2.9% yoy, core CPI edged down from 3.3% to 3.2%. This incremental progress reduces pressure on the Fed to maintain restrictive policy for an extended period. More importantly, that makes a return to tightening less likely.

    Futures pricing didn’t change much over the week, reflecting a 97.9% chance that Fed will hold rates steady at 4.25–4.50% at the January meeting, with a 72.4% chance of another hold in March. The probability of a May rate cut stands at 44%, rising to 66% by June. By year-end, markets still project a 52.1% chance of just one rate cut, reducing rates to 4.00–4.25%.

    Technically, DOW’s break of 55 D EMA (now at 43038.33) suggests that pullback from 45073.63 has completed at 41844.98 already. The medium term channel holds intact, as well as the up trend. Whether DOW is ready for another record run through 45073.63 would depend on the momentum of the next rise.

    But even in case that corrective pattern from 45073.63 is going to extend with another falling leg, downside looks more likely than not to be contained by cluster support level at around 40k, with 39889.05 resistance turned support, and 38.2% retracement of 32327.20 to 45073.63 at 40204.49.

    NASDAQ’s price actions from 20204.58 are also clearly corrective looking so far, with notable support from 18671.06 resistance turned support. With this support intact, larger up trend should resume through 20204.58 sooner rather than later.

    Yields and Dollar Index Form Short-Term Top With Improved Risk Sentiment

    Improved risk sentiment in US markets has triggered pullback in both 10-year Treasury yield and the Dollar Index, suggesting a temporary pause in their recent rally.

    Technically, a short term top is likely in place at 4.809 in 10-year yield, considering that D MACD has crossed below signal line. More consolidations should follow in the near term below 4.809, with risk of deeper pull back to 55 D EMA (now at 4.434). But outlook will continue to stay bullish as long as 38.2% retracement of 3.603 to 4.809 at 4.348 holds. Another rally through 4.809 to retest 4.997 high is expected, though breaking the psychological 5% level may prove challenging without stronger momentum.

    Dollar Index could have formed a short term top at 110.17 too, just ahead of 61.8% projection of 100.15 to 108.87 from 105.42 at 110.31, with D MACD crossed below signal line. Deeper retreat could be seen to 108.07 resistance turned support, or even further to 55 D EMA (now at 107.15). But near term outlook will stay bullish as long as 38.2% retracement of 100.15 to 110.17 at 106.34 holds. Firm break of 110.17 will resume the rally to 100% projection at 113.34.

    FTSE and DAX Surge to Record Highs

    Risk-on sentiment was also evident in the European equity markets, with FTSE 100 and DAX surged to new record highs. The optimism was fueled by expectations of rate cuts, positive economic projections, and hopes for political stability.

    In the UK, a trio of softer economic data—GDP, retail sales, and CPI—reinforced market expectations for BoE easing. Markets now anticipate more than 75 basis points of rate cuts throughout 2025, compared to just 50 basis points priced in the prior week. A 25bps rate cut in February is now universally expected.

    Supporting this sentiment, IMF upgraded its UK growth forecast for 2025 by 0.1 percentage points to 1.6%, making the UK the third-fastest-growing G7 economy after the US and Canada. IMF attributed this optimism to increased government investment, improved household finances, and anticipated rate cuts.

    That’s a strong nod to the Labour government despite wide criticism on its Autumn Budget. Meanwhile, IMF also projects BoE’s headline rate to fall from 4.75% to 3.75% by year-end.

    Technically, FTSE’s break of 8474.41 confirmed that triangle consolidation from there has completed at 8002.34, and larger up trend has resumed. Next target is 61.8% projection of 7404.08 to 8474.41 from 8002.34 at 8663.80.

    In Germany, DAX surged to new record on improving risk appetite and expectations of continued ECB easing.

    ECB’s December meeting minutes leaned towards the dovish side, and revealed discussions about a more aggressive 50-basis-point cut. The central bank ultimately favored a measured approach, with consensus on a more controlled pace of easing, to allow for checkpoints to confirm that disinflation remains on track.

    While IMF downgraded its 2025 growth forecasts for Germany and France, the outlook still points to modest recovery. Germany, previously expected to grow by 0.8%, is now forecasted to expand by just 0.3%, marking a slow rebound from two years of contraction. France’s growth forecast was also reduced by 0.3 percentage points to 0.8%. The positive side of the forecasts is that both economies are expected to regain some footing this year.

    It should also be noted that markets are probably pricing in a degree of optimism around the February 23 snap elections, which could lead to greater political stability and more consistent economic policies in Germany.

    Technically, DAX should now be on track to 100% projection of 14630.21 to 18892.92 from 17024.82 at 21287.52 next.

    Nikkei Weighed by BoJ Hike Risks, SSE Struggles to Rebound

    Investor sentiment in Asia, however, was much less optimistic, with Japan facing headwinds from growing expectations of Bank of Japan policy normalization, while China’s economic recovery struggles to inspire confidence amid external pressures.

    In Japan, speculation over a rate hike at the upcoming January 23–24 BoJ meeting has intensified. Governor Kazuo Ueda and Deputy Governor Ryozo Himino have repeatedly hinted at the possibility of policy tightening, with analysts interpreting their comments as preparation for market adjustments.

    Additionally, reports suggest BoJ is likely to raise its inflation forecasts in its quarterly outlook, highlighting upside risks fueled by the persistently weak Yen and elevated import costs. Internally, BoJ policymakers believe that stabilizing inflation expectations around the 2% target could allow short-term rates to rise as high as 1% without hindering economic growth.

    Traders are pricing in an 80% chance of a rate hike from 0.25% to 0.50%.

    Nikkei weakened for the week on expectations of BoJ’s normalization move, but stayed above 37651.07 support.

    Outlook is unchanged that price action from 42426.77 are developing in to a medium term three wave consolidation pattern, with rebound from 31156.11 as the second leg.

    For now, another rally cannot be ruled out, but strong resistance should emerge below 42426.77 to limit upside. Firm of 37651.07 support will in turn indicate that the third leg has likely commenced, and bring deeper fall to 35253.43 support and below

    In China, Shanghai SSE Composite struggled to generate meaningful gains other than a mild recovery.

    China’seconomy grew 5.4% yoy in Q4, lifting full-year GDP growth to 5.0%, matching the government’s target.Meanwhile, market rumors suggest Beijing is hesitant to use Yuan depreciation as a tool to counter tariffs from a second Trump presidency. Analysts believe sharp currency depreciation, as seen during Trump’s first term, could harm the struggling economy more than it would help.

    However, market confidence remains subdued, and the stock market recovery appeared technical rather than driven by fundamentals.

    SSE found support at the 50% retracement level of 2,635.09 to 3,674.40 at 3154.74, but remained capped below 55 D EMA (now at 3279.16).

    Risk remains on the downside for the near term for SSE. Break of 3140.90 will extend the corrective fall from 3674.40 to 61.8% retracement at 3032.11. Nevertheless, sustained break above the 55 D EMA will indicate that stronger near term rebound is underway back towards 3494.86 resistance.

    USD/CAD Weekly Outlook

    USD/CAD’s late break of 1.4466 resistance confirms larger up trend resumption. Initial bias is back on the upside this week for 1.4667/89 long term resistance zone. For now, outlook will stay bullish as long as 1.4302 support holds, in case of retreat.

    In the bigger picture, up trend from 1.2005 (2021) is in progress for retesting 1.4667/89 key resistance zone (2020/2015 highs). Decisive break there will confirm long term up trend resumption. Next target is 100% projection of 1.2401 to 1.3976 from 1.3418 at 1.4993. Medium term outlook will remain bullish as long as 1.3976 resistance turned holds (2022 high), even in case of deep pullback.

    In the longer term picture, price actions from 1.4689 (2016 high) are seen as a consolidation pattern, which might have completed at 1.2005. That is, up trend from 0.9506 (2007 low) is expected to resume at a later stage. This will remain the favored case as long as 1.3418 support holds.



    Source link