EURUSD
- The U.S. dollar is trading 0.2% higher at 101.570 against a basket of six other currencies in early holiday-impacted European trade on Monday.
- This week's highlight is the conclusion of the latest Federal Open Market Committee meeting, which is expected to increase the benchmark lending rate target by another 25 basis points on Wednesday. This could prove to be the end of the Fed’s tightening cycle as the US economy is slowing quite rapidly.
- With the European Central Bank expected to be more aggressive than the Fed in coming months, speculators boosted their net bearish position on the greenback against major peers to the most since June 2021, data from the Commodity Futures Trading Commission showed late last week.
- The ECB meets on Thursday, with the policymakers also expected to sanction another rate hike, although the size of the increase remains in doubt. Tuesday’s data on eurozone consumer price inflation could be the deciding factor, with underlying price pressures likely to remain uncomfortably high, pointing towards a rate hike of 50 basis points.
- EUR/USD fell 0.1% to 1.1006, with activity likely to be limited given the majority of Europe is enjoying the Labor Day holiday.
| SMA (1D) | Slighty Rising |
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| RSI (1D) | Slighty Falling |
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| MACD (1D) | Neutral |
Closing statement: DWith the FOMC meeting and the ECB meeting this week, the market is likely to be volatile. Investors will be closely watching the outcome of both meetings and the US jobs report, which is expected to show a moderation in jobs growth. With the ECB expected to be more aggressive than the Fed in the coming months, there could be further pressure on the US dollar against major peers, including the euro.
GBPUSD
- GBP/USD fell 0.2% to 1.2553 in early European trade, likely due to the dollar's strength ahead of the Fed and ECB policy meetings and the release of the monthly U.S. jobs report.
- Officials in the U.K. are in a blackout period before their decision on May 11, leading to a quiet week for GBP/USD.
- The European Central Bank is expected to sanction another rate hike, but the size of the increase remains in doubt and could depend on Tuesday's data on eurozone consumer price inflation.
- Speculators have boosted their net bearish position on the greenback against major peers to the most since June 2021, potentially indicating a further drop in GBP/USD.
- With the Fed's tightening cycle potentially coming to an end due to an economy that's slowing quite rapidly, the dollar's strength could be temporary.
| SMA (1D) | Slightly Rising |
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| RSI (1D) | Slightly Falling | |
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| MACD (1D) | Neutral |
Closing statement: GBP/USD fell in early European trade due to the dollar's strength ahead of key policy meetings and the release of the U.S. jobs report. The European Central Bank is expected to sanction another rate hike, but uncertainty remains regarding the size of the increase, while the Fed's tightening cycle may be coming to an end. The blackout period for officials in the U.K. also led to a quiet week for GBP/USD.
GOLD
- Gold futures ended April with a second straight monthly settlement in the positive, closing at $1,999.10 on the Comex.
- The spot price of gold settled at $1,990.06, up $2.21 or 0.1%.
- Gold bulls are betting that the dollar will fall again soon, keeping gold close to the key $2,000-an-ounce mark.
- The Fed is expected to embark on a quarter-point rate hike on May 3, which is causing the dollar to rise on these expectations.
- Gold's price outlook depends on whether it can break above the daily Middle Bollinger Band of $2,000 and the descending channel resistance of $2,008, which could lead to a bullish rebound, or if it fails to break above these levels, it could drop towards the $1,975-$1,970 support zone.
Closing statement: Gold futures ended April on a positive note, but the selloff in gold came as the dollar rebounded on expectations of a quarter-point rate hike by the Fed. Gold bulls are keeping a close eye on the Fed's policy moves and betting that the dollar will fall again soon, potentially pushing gold towards a record high.
CRUDE OIL
- WTI crude oil closed the week in the red with a loss of 1.4%, but showed a positive monthly return of 1% for April, the first positive monthly closing after five previous months of losses.
- Brent crude settled up 1.5% at $79.45 on its June delivery contract and closed at $80.33, up 2.7% on the day for July delivery on Friday.
- The market has been impacted by OPEC's overly-hyped production cuts that have fallen short on delivery, according to John Kilduff, the founding partner at New York energy hedge fund Again Capital.
- Sunil Kumar Dixit, chief technical strategist at SKCharting.com, warns that WTI's failure to progress beyond $79.30 could lead to a renewed decline towards $74, below which sits the confluence zone of the 200-month SMA of $72.80 and the 50-month EMA of $72.20.
- Major support is seen at the 200-week SMA of $66.80 and the 100-month SMA of $60, according to Dixit.
| SMA (1D) | Slightly Falling | |
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| RSI (1D) | Slightly Falling | |
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| MACD (1D) | Falling |
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Closing statement: Despite a positive monthly closing for WTI in April, the crude oil market remains uncertain due to OPEC's production cuts and mixed performance in demand. The coming week may see continued bearish patterns, with resistance at $79.30 and major support at $66.80 and $60.
DAX
- The DAX index in Germany traded 0.2% higher at the end of the week, while the FTSE 100 in the UK fell 0.2% and the CAC 40 in France dropped 0.2%.
- Mercedes Benz (ETR:MBGn) stock fell 0.3% despite raising the outlook for its vans division due to higher demand in the U.S. and China, as the company posted a fall in year-on-year earnings.
- NatWest Group (LON:NWG) stock fell over 5% despite beating expectations in its first-quarter operating profit, as the bank set aside less than expected for bad loans, which underperformed a number of its peers.
- NatWest Group (LON:NWG) stock fell over 5% despite beating expectations in its first-quarter operating profit, as the bank set aside less than expected for bad loans, which underperformed a number of its peers.
- Investors are carefully studying a flood of growth and inflation data ahead of next week’s European Central Bank policy-setting meeting, as the ECB is expected to raise interest rates in early May.
| SMA (1D) | Slightly Rising |
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| RSI (1D) | MACD (1D) | Rising |
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| MACD (1D) | Neutral |
Closing statement:The DAX index in Germany traded higher at the end of the week, boosted by positive close on Wall Street overnight on the back of strong corporate earnings. While Mercedes Benz and NatWest Group both saw their stock fall despite some positive news, Numis experienced a significant increase in stock value after Deutsche Bank agreed to buy the broker. Investors are keeping a close eye on growth and inflation data ahead of the upcoming ECB policy-setting meeting, which is expected to result in a raise in interest rates.