Chair Powell films an interview with 60 minutes. Image source: Federalreserve, clickr.com
No Need to be Overly Optimistic Over FOMC's April Meeting
The Federal Open Market Committee (FOMC) of the Federal Reserve is convening this Wednesday for the third time this year. The Committee is expected to leave the near-negative Federal Funds Rate unchanged at 0.25 per cent, similar to what the ECB did last week.
Jerome Powell and his colleagues are also unlikely to scale up FED's massively accommodative Quantitative Easing (QE) programmes. Consumer prices are already picking up as retail demand increases.
U.S. Headline Inflation Rate. Image source: TradingEconomics.com
Headline inflation thus rose sharply to 2.6 per cent in March, which is inlined with FOMC's short term projections regarding inflation getting moderately above 2.0 per cent in the medium term:
"With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer term inflation expectations remain well anchored at 2 percent."
FED's preparedness to seek short-term inflationary pressures exceeding its longer-term goals is precisely why investors should not hope for the FOMC to adopt a more hawkish stance on Wednesday. Instead, the Committee is likely to comment on these developments as a step in the right direction, likely strengthening the dollar as a consequence.
U.S. Growth Rate Expected to Accelerate in Q1
On Thursday, the U.S. Bureau of Economic Analysis is scheduled to publish the advance Gross Domestic Product (GDP) growth data for the three months to March. The preliminary forecasts anticipate the rate of economic expansion to have reached 6.5 per cent in the first quarter of 2021.
U.S. q/q Advance GDP Growth Rate. Image source: TradingEconomics.com
Such a recorded performance would mean that U.S. growth would have sped up from Q4's expansion of 4.3 per cent, underpinning the solid uptick in demand.
The advanced GDP report represents the first reading of underlying economic activity recorded over a single quarter, which is why it tends to cause the most sizable market reactions. In contrast, the preliminary and final GDP reports only revise the advanced data.
That is why Thursday's numbers are likely to boost further the underlying volatility that is currently affecting the greenback.
The Earnings Season Reaches a Climax with Big Tech Releases
Last but not least, Silicon Valley's earnings season is about to reach boiling temperature this week with releases from some of the most renowned technological giants in the world.
First up, Tesla is scheduled to post its earnings for Q1 on Monday after the market close. On Tuesday, Google's parent company Alphabet and Microsoft both report after the market close. Apple and Facebook follow suit on Wednesday, whereas Amazon closes the pivotal week on Thursday.
The quarter is thus far proving to be one filled with hits-and-misses for most companies owing to the uneven impact of the pandemic on different sectors. Even though restrictions have been gradually eased over the first few months of the year, the risk to recovery continues to be subject to changing health conditions.
These volatile conditions are likely to cause even higher adverse fluctuations on most related assets, particularly on the greenback. A key pair to focus on this week will be the USDJPY because of BOJ's policy decision adding up extra pressure in addition to the other events.
As can be seen on the daily chart below, the pair is currently establishing a Falling Wedge pattern, which typically entails likely bullish trend continuation. What is even more interesting is the fact that the price action is currently consolidating around the 38.2 per cent Fibonacci retracement level at 107.676 and the 50-day MA (in green).
The aforementioned volatility outbursts this week could cause more price fluctuations between the 38.2 per cent Fibonacci and the 23.6 per cent Fibonacci retracement level at 108.847 before the price eventually breaks out above the Wedge's upper boundary.
USDJPY 1D Price Chart. Image source: Trendsharks ©, created with TradingView.com
Other Prominent Events to Watch for:
Monday - German ifo Business Climate; US Durable Goods Orders.
Tuesday - BOJ Policy Rate Decision; US CB Consumer Confidence; Starbucks Corp. reporting AMC; Visa Inc. reporting AMC.
Wednesday - Australia CPI q/q; OPEC-JMMC Meetings; Canada m/m Retail Sales; Boeing CO. reporting BMO; Ford Motor Co. reporting TAS; Qualcomm Inc. reporting AMC.
Thursday - Twitter Inc. reporting AMC; Mastercard Inc. reporting BMO.
Over the past few weeks, the USD has lost nearly 800 pips against the JPY, driven by Japan's shift away from decades of negative interest rates. With the Bank of Japan raising rates for the second time in a row, investors are adjusting their positions to [...]
Despite its volatility, Silver remains in an uptrend. While not as dynamic as Gold, XAG often mirrors XAU’s movements. A Multiple Top has formed around $32.50, and history shows that the more a level is tested, the weaker it becomes, increasing the likelihood of a [...]
A combination of factors, including Trump-era tariffs, the emergence of DeepSeek, and a slowdown in GDP growth, has contributed to the recent pullback in the US30 from its record highs. From a technical standpoint, a Double Top pattern has formed around the [...]
Over the past month, Silver has experienced an impressive 13% surge, marking a strong bullish trend. Despite notable volatility and multiple pullbacks, the overall momentum remains firmly to the upside. This strength is further validated by the Golden Cross, a historically reliable [...]
The Swiss Stock Market has been on a remarkable rally, surging over 15% between December and January. At times, the price action resembled a near-vertical ascent. However, following the announcement of Trump’s tariffs over the weekend, Monday’s trading session opened with a [...]
Between October and January, GBPUSD experienced a significant decline, dropping by approximately 1300 pips. However, we now observe signs of a potential trend reversal. Over the past few weeks, the pair has rebounded by more than 400 pips, shifting momentum toward a [...]
For the past 1 month, the UK100 saw a fantastic 600 point rally! The occasional corrections only attracted more buyers, which is healthy for the current up trend and the RSI currently exhibits elevated demand. A 130 point correction started last week on Friday, dipped below the [...]
Over the past two weeks, Japan’s leading stock index surged 2,000 points, reflecting strong bullish momentum. However, this week saw a sharp sell-off, erasing nearly all gains since mid-January. Despite this drop, the decline stalled at the 61.8% Fibonacci retracement, a key [...]
There is a clear shift in the momentum in the Oil market, with the commodity dropping with nearly 10% for the past 2 weeks. The Death Cross, a classic sell signal, is indicating that sellers are indeed in control and we are lookin now at a strong [...]
The 350 pip rally for the past 2 weeks seems like a trend reversal for EURUSD, with buyers back in control. The strong bullish momentum is also confirmed by the Golden Cross, a historic buy signal. Corrections are healthy for the trend and we currently looking at [...]
For the past 2 weeks GBPUSD went up with 400 pips and this is why we believe we might be looking at a trend reversal. The strong bullish momentum is confirmed by the Golden Cross, a classic buy signal, which supports the hypothesis that [...]
The Death Cross formation in USDJPY signals a robust downward momentum, with the USD depreciating by 300 pips over recent weeks. Further declines exceeding 300 pips are anticipated, potentially reaching the 152.00 level. Despite several corrective pullbacks, the price has been unable to surpass the [...]
Following the formation of a Double Top pattern at the 21,930 level last Friday, the NASDAQ has experienced a significant decline, plummeting by nearly 800 points. This downturn has been primarily driven by unfavorable manufacturing data emerging from China, alongside the Bank of Japan's interest rate hike on Friday. The market reaction closely resembles the [...]
GOLD's uptrend has regained strength, with several factors supporting further gains. The RSI bounced from oversold levels and now stands at 65, signaling growing demand and increasing buying volume. Additionally, the appearance of a [...]
For the past few months, USDJPY gained 2100 pips! Then, about 10 days ago the USD started dropping and so far corrected with 300 pips, dropping down to 155.00. A local Double Bottom got formed and this level also aligns with the important [...]
For the past week, the US100 has surged by over 1,000 points, signaling strong bullish momentum. The RSI stands at 69, indicating high demand and buyer dominance. A bullish Golden Cross pattern has emerged, confirming the upward trend. Despite a brief correction yesterday, with the index dipping to [...]
The Descending Triangle on the 4-hour chart, typically a bearish signal, failed to materialize this time. Instead, the Triple Bottom support at 92,000 held strong, driving significant buying volume. A Golden Cross—a classic bullish indicator—confirms strong [...]
After a 300-point correction from its December highs, the SP500 appears to be rebounding as bulls regain control. This recovery is supported by positive economic data, including strong NFP numbers, low unemployment, and CPI readings meeting expectations—all favorable for stocks. Additionally, the earnings season began yesterday with [...]
For several months, the EUR has been trending downward, losing hundreds of pips. While occasional corrections to the upside occur, bears remain in control. The strong downward momentum is highlighted by the Death Cross pattern, a classic sell signal. Yesterday, we observed another [...]
The Dollar remains strong, with buyers firmly in control since the Fed's December comments hinting at fewer 2025 rate cuts. This drove a 400-pip rally in USDCAD, now facing resistance near 1.4450 as early buyers take profit. Corrections are part of healthy trends, and the pair is testing support at [...]
