Analyst Articles – Forex News 24

Dollar, S&P 500 and Oil Trends Depend on Fed, Trade Wars, Risk Appetite
Crude Oil Price Declines May Accelerate on Fed, Soft US Econ Data
AUD/USD, AUD/JPY Near Critical Support
April Bank of Japan Meeting & EURJPY Price Forecast
Currency Volatility Could Ignite with EZ GDP, FOMC, US NFP Next Week
FX Price Action Setups in EUR/USD, GBP/USD, USD/CHF and USD/CAD
Crude Oil Price Crumbles on Trump Call to OPEC Despite US GDP Beat
USD Holding at Fresh Highs, Bend or Break?

Dollar, S&P 500 and Oil Trends Depend on Fed, Trade Wars, Risk Appetite

Posted: 26 Apr 2019 10:03 PM PDT

Fed and GDP Talking Points:

Despite Amazon’s earnings boost and a stronger 1Q US GDP release, the S&P 500 wouldn’t spin a record high into a true bull trend
The Dollar will be overloaded with event risk over the coming week including trade and NFPs, but the top listing is the FOMC decision
Crude oil suffered its biggest single-day drop since December 24th Friday as President Trump said he pressured OPEC once again

Do you trade on fundamental themes or event risk? See what live events we will cover on DailyFX in the week ahead (including Eurozone GDP, the Fed and BOE rate decisions) as well as our regular webinar series meant to help you hone your trading.

Fundamental Primacy Shifts from Earnings to Economic Growth

While much of the fundamental attention this past week was paid to specific event risk or surprise headlines, the real influence was to be found in underlying themes. The US corporate earnings season hit full stride this past week, with some of the largest companies updating investors on their performance while certain groupings would inadvertently provide update on critical systemic themes: trade wars, growth, monetary policy, etc. What is unmistakable in the assessment of risk trends across regions and asset classes is that US indices continue to outperform most of their top liquidity counterparts. That trend continued through this past week as the ‘rest of world equities’ segment (I use VEU) struggled and emerging market assets wavered while the S&P 500 and Nasdaq 100 closed at record highs. There are moves that are leading and those that deviate – the former insinuates that the rest of the market will eventually catch up and the latter typically finds the outperformer collapse as the systemic reality kicks in. What is remarkable is that US equities as an asset class did not uniformly climb this past week – there was a distinct drive from the tech sector, which was made clear in very different pace between the Nasdaq and Dow. Despite this existing advantage, however, the strong after-hours numbers from Microsoft (Wednesday evening) and Amazon (Thursday evening) did not translate into strong extension for the Nasdaq. That said, the key listings for the week ahead will struggle to overcome the inertia. Google and Apple will report on the tech side while General Motors, General Electric and Pfizer will touch upon different – but just as restricted – trends.

Chart of Nasdaq-to-S&P 500 Ratio and Daily Change (Daily)

When considering other systemic motivators through the coming week, we will touch upon the gamut of familiar drivers. Trade wars are another tide that is still high on the fundamental horizon. Japan’s Prime Minister and Finance Minister traveled to Europe and North American this past week in advance of the G20 summit the country will host in late July. Trade was on the agenda, but progress seemed generally symbolic. An interesting note was made to suggest discussions should not include the currency (Yen) which is ironic considering Japan has targeted exchange rates before and President Trump has increased the frequency with which he has weighed in on the Dollar. The sentiment surrounding US-Chinese relationships is unclear so the market is defaulting to skepticism; and here too, the question of exchange rates is being broached. My real concern in this vein is with the constant threats being made by the Trump administration against European interests – both direct and indirect. Another theme to keep track of moving forward is monetary policy. This is not an active catalyst itself so much as a point of acceleration. Should the market be sent into a tailspin whereby the world’s largest central banks are forced to fight another financial fire, we will quickly find their ability to avert crises is all but lost. The real impact from monetary policy comes through its implications through growth – which is more appropriately described as the fear of a stalled global economy or even outright recession. The US and Chinese 1Q GDP figures managed to beat expectations, but concern for the future seems to have eased little.

Chart of US 10-Year-3-Month Yield Curve with US Recessions in Red and SPX in Orange (Monthly)

The Dollar Will be Burdened by a Dense Economic Calendar

Transitioning to the new trading week, the Dollar remains the ‘major’ sporting the greatest fundamental pressure. Whether we look to the trade-weighted DXY Index, my own equally-weighted measure or simply the key EURUSD pair; we come to the same conclusion: the Greenback earned an impressive bullish break this past week. The neartwo–year highs draws considerable speculative appetite all on its own, but we have seen many technical breaks flounder soon after liftoff. It should come as no surprise then that there is remarkable reticence surrounding the Dollar’s achievements through the close of this past week. In fact, the reports that the US economy had grown 3.2 percent on an annualized basis through the first quarter – handily besting forecasts – realized an actual slip from the Dollar. There are questionable details to the headline reading like the large contribution from temporary factors (1.7 percentage points from net exports and inventories) and the slowdown in consumer spending with only a 0.8 percent increase. That said, I think the market simply isn’t able to leverage anything more from the growth theme. In the week ahead, we will tap into multiple aspects of the Greenback’s role through event risk like the Fed’s favorite inflation statistics (PCE deflator), an important consumer confidence update, an advance traded reading and the ever-popular monthly NFPs. The top listing, however, will be the FOMC rate decision on Wednesday. The group will not change its actual policy settings, but the market is tuned in as the group has throttled back from steady hikes owing heavily to a lowered growth forecast. Well, the 1Q GDP figure seems to call that reasoning into question.

Chart of DXY Dollar Index and Implied Yield from Dec 2019 Fed Fund Futures (Daily)

Rate decision and growth update considered, one of the most productive drivers for the Dollar has arguably been the trouble suffered by the benchmark’s most liquid counterparts. The Yen has struggled in the face of risk trends owing to the carry trade appeal the market builds upon. That has settled this past week. The Sterling is embroiled in Brexit first and foremost, but we are not to expect any serious progression points on this theme until the government/Parliament announce critical breakthroughs. We should remember that as we wade into the Bank of England’s (BOE’s) Super Thursday. This particular update includes a rate decision, Governor Carney presser and the Quarterly Inflation report. That said, what the central bank does will be determined by Brexit, not the other way around. Perhaps one of the most critical fundamental stories in its own right – but also an indirect Dollar motivator – will be the Euro’s economic docket. Through Sunday, Spain will be at the polls and another country will vote on just how in sync it intends to be with the European Union. The more probable impact comes through the 1Q GDP run on the calendar. There are a number of countries due to update growth, but I will watch the Eurozone and Italian figures the closest.

Beware the Japanese Yen, Oil Is Unlikely to be Active Despite its Threats

Looking out over the horizon next week, we are likely to draw a lot of our market’s intent from what is scheduled specifically on the US docket or what shows up in the region’s headlines. That said, there are other systemic themes that we should be mindful of in the event that conditions can leverage a speculative response. One of the most interesting environmental distortions ahead comes through the Japanese markets. The world’s third largest economy is due to be offline for the entire week for the Golden Week holiday. Yet, due to certain circumstances, the holiday conditions will extend even further to include the longest period of drift that we have seen from the country since World War II. Normally, traders would assume this gives license to simply ignore the Japanese Yen and related assets because the primary market for liquidity will be absent. However, the volatility from January 3rd should serve as a reminder that market distortions can lead to unexpected and severe movements. At the beginning of the year, the Yen (along with the Aussie, Kiwi and a few others) experienced a flash crash that was spurred in large part by the thin liquidity. We could reasonably risk the same in the week ahead if any number of probable events were to ignite the fire. It should be said that these developments are not readily tradeable as they are unpredictable and execution unreliable given how thin conditions are.

Chart of USDJPY and Ratio 1-Day to 1-Month Average Daily Range (Daily)

Another market to keep tabs on through the coming week is commodities. Gold is a class unto itself as the precious metal serves as a measure of how unnerved investors are over risk assets and how unstable the future looks against the fundamental stresses that we are facing. The rebound this past week certainly should raise some eyebrows given the sense of risk appetite we default to through baselines like US indices. Yet, my interest in the physicals market skews more towards those products that associate to risk trends and growth forecast. There is no more tied-in asset than crude oil, and it took an unmistakable dive this past week. The tumble below $65 came despite the impressive US GDP figure that crossed the wires. That is troubling, even if there was a competitive fundamental wind. That weather pattern was US President Donald Trump who remarked that he had talked to OPEC members to encourage them to lower the cost of the raw material so that the savings could roll into further refined products (gasoline). That said, the President has made these efforts multiple times before and most occasions failed by the following day. Will this prove any different? This likely has far more today with the contributions from risk trends and global growth than what President Trump is able to affect. We discuss all of this and more in this weekend Trading Video.

Chart of US Oil and 1-Day Rate of Change (Daily)

If you want to download my Manic-Crisis calendar, you can find the updated file here.

2019-04-27 04:24:00

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Crude Oil Price Declines May Accelerate on Fed, Soft US Econ Data

Posted: 26 Apr 2019 09:27 PM PDT

Oil Fundamental Forecast: Bearish

Crude oil prices suffered their worst week in two months despite Iran supply disruption fears
The commodity and equities may be vulnerable to a Fed that doesn't hint at cutting soon
Oil at risk from disappointing US economic data: core PCE, ISM manufacturing, jobs next

Trade all the major global economic data live and interactive at the DailyFX Webinars. We'd love to have you along.

Oil Weekly Wrap

Crude oil prices started off the week on a high note after reports crossed the wires that the US is going to end Iran sanction waivers for imports of the commodity come May 2. This created supply disruption concerns which bolstered petroleum prices. The sentiment-linked commodity then started losing upside momentum on overall mixed US earnings, particularly from industrials as 3M Company announced job cuts.

By Friday, oil suffered its worst week in two months as US President Donald Trump took another jab at OPEC's efforts to uphold prices. This also followed a mixed US GDP report. The 3.2% q/q growth in the first quarter was undermined by weakness in personal consumption which is the largest portion of GDP (almost 70%). Moreover, volatile inventories and trade contributed to most of the sunny surprise.

Oil Week Ahead, The Fed

Pro-risk crude oil prices have the upcoming Fed rate decision to look to for direction. Fed funds futures are showing a roughly 66% probability that the central bank may cut once by the end of this year. This means that with each passing monetary policy announcement that the Federal Reserve does not support expectations of an impending rate cut, risk-leveraging dovish bets could falter and send assets tied to speculative sentiment, like equities, tumbling.

This is a clear downside vulnerability for the commodity because of how closely it has been following the S&P 500 since bottoming in late December. Fed Chair Jerome Powell stressed on multiple occasions that they are closely watching external risks such as a European slowdown and Brexit. On top of this, he added that 'rates are in a right place'. In short, the risks for crude oil and equities seem tilted to the downside.

US Economic Data

In the context of their data-dependent approach and last week's first quarter GDP report, the week ahead contains a plethora of domestic economic statistics. We have the core PCEdeflator (the central bank's favored measure of inflation), consumer confidence, ISM manufacturing and a jobs report. These can impact the US Dollar and thus crude oil prices since the latter is typically priced in the former.

*All times listed in GMT

On the chart below, the Citi Surprise Economic Index still shows that data outcomes have tended to disappoint relative to expectations. Despite increasingly softer-than-expected economic results, the S&P 500 continued rising along with the commodity as markets focused on a more dovish Fed. Though, last week we did start seeing a divergence between the two.

The Citi index hints that economists may be overestimating the health and vigor of the economy, opening the door to further disappointing outcomes. The counterargument is that it could further fuel Fed rate cut bets, but last Friday showed a lackluster response. It may come down to what Jerome Powell has to say on Wednesday which just leaves the jobs report on the docket afterwards.

With that in mind, the density of the US economic calendar and the prominence of monetary policy may put OPEC output fundamentals on the sidelines. Chinese petroleum consumption shifting away from Iran and towards Saudi Arabia may also cool concerns about the impact of the US discontinuing sanction waivers. Trade negotiations between the US and Japan are another wildcard for market mood.

Oil Trading Resources:

— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

Other Weekly Fundamental Forecast:

Australian Dollar Forecast: Battered Australian Dollar Could Face Yet More Disappointing Data

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2019-04-27 04:00:00

AUD/USD, AUD/JPY Near Critical Support

Posted: 26 Apr 2019 03:14 PM PDT

– Aussie weakness continued as a very visible theme throughout this week, with a bit of support showing up on Thursday and Friday.

– AUD/USD tested a big level of long-term support at the price of .7000.

– AUD/JPY set a fresh 2019 high just last week; but a stark contrast has shown in near-term price action in the pair.

– AUD/USD Bears Challenge the Big Figure at .7000

AUD/USD Technical Price Forecast: Bullish

Just last week, AUD/USD was carrying bullish breakout potential as prices tested a key Fibonacci level at two-month highs. This price is at .7206, and this is the 76.4% retracement of the 2008-2011 major move in the pair; and more important than any theoretical justifications, this price helped to set support in the latter-portion of last year, and resistance in the early-portion of this year.

AUD/USD Weekly Price Chart

Chart prepared by James Stanley

That resistance inflection last week initially led to a cautious move lower. But bears stayed on the attack this week as the US Dollar broke-out to fresh 22-month highs, and prices in AUD/USD folded all-the-way back down to the support side of the multi-month range around the .7000 big figure. This psychological level was crossed briefly during Thursday trade but, at this point, buyers have been able to push prices back-above, indicating a hold of support, at least for now.

AUD/USD Four-Hour Price Chart

Chart prepared by James Stanley

AUD/USD: Will Long-Term Support Allow for Range-Fill in Shorter-Term Themes?

The allure of support at the .7000 level is not a new scenario in AUD/USD. This price has come into play as support in a number of environments since price action rallied above in 2003. And most of these scenarios have carried the same general response of buyers helping to hold the lows at-or-around this level, with the notable exception of the financial collapse in 2008 when prices pushed below and remained for around six months. This level was tested through again in the early-part of this year but, similarly, buyers responded to push back-above.

AUD/USD Monthly Price Chart

Chart prepared by James Stanley

AUD/JPY Snaps Back from Fresh 2019 Highs, Builds Evening Star on the Weekly Chart

AUD/JPY Technical Price Forecast: Bearish

A similar bearish move played out in AUD/JPY this week, accented by an additional amount of Yen-strength than what was seen in AUD/USD above. Last week saw AUD/JPY tip-toe up to a fresh 2019 high with prices rallying above the 80-level. This began to open the possibility of bullish trend strategies, but a stark contrast showed this week as Yen-strength came into favor and held through the bulk of this week's trade. AUD/JPY is now trading very near the lows that held through the past three months, taken from around the 77.50 level.

AUD/JPY Eight-Hour Price Chart

Chart prepared by James Stanley

The backdrop here, however, is a bit different than what was looked at above, and the key difference is proximity to longer-term support. As shown in the AUD/USD price chart above, prices in the major pair have had a tendency to cauterize support around the .7000 big figure. But in AUD/JPY – considerable space exists below current range support that can keep the door open for bearish continuation potential. From the weekly price chart below, this zone is highlighted around the 75.00 psychological level.

If the Aussie is to remain weak, or should risk aversion themes become more prominent, the downside in AUD/JPY could be an attractive theme, more so than what's present in AUD/USD at the moment given that big area of long-term support that came into assist with this week's lows.

AUD/JPY Weekly Price Chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q1 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you're looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we're looking at what we're looking at.

If you're looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

— Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

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2019-04-26 22:00:00

April Bank of Japan Meeting & EURJPY Price Forecast

Posted: 26 Apr 2019 01:58 PM PDT

Talking Points:

– Japan's "Golden Week" – a period at the end of April/beginning of May with several holidays clustered together – will see Japanese markets closed from April 29 to May 7.

– The last time Japanese markets were closed while global markets were otherwise open was in January 2019 – which precipitated the liquidity conditions that led to the Japanese Yen flash crash.

– Recent changes in retail trader positioning suggest that AUDJPY will likely continue lower.

Join me on Mondays at 7:30 EDT/11:30 GMT for the FX Week Ahead webinar, where we discuss top event risk over the coming days and strategies for trading FX markets around the events listed below.

04/29 to 05/07 | Japan Golden Week – Japanese Markets Closed

It's the end of April, which means it's time for Japan's "Golden Week." The Golden Week is typically a period at the end of April/beginning of May that encompasses several holidays during a short timeframe, and due to the inefficiencies of frequently opening/closing businesses, many factories shutdown and offices work on skeleton crews. In turn, Japanese financial markets are also closed.

The implications of Japanese financial markets being closed bears particularly attention this year, given events that have transpired in the recent past. Recall what happened at the start of January 2019: Japanese markets were closed while global markets were otherwise open. During the crossover session between North American trading and Asian trading, an earnings warning by Apple sent traders scrambling; programmatic trading algorithms kicked in, selling highly correlated assets across the board in quick succession.

The benefit of hindsight informs us that the January 2019 Japanese Yen flash crash was product of the market conditions at hand – a slew of factors that rarely line up all at once. While a Yen flash crash during Golden Week is not our base case scenario, traders should be fully aware of the risk that comes with holding open JPY positions over the coming days – there is more risk now than usual. If there is abnormal activity in the JPY-crosses over the coming days, look no further than AUDJPY price action.

Pairs to Watch: AUDJPY, EURJPY, USDJPY

AUDJPY Technical Analysis: Daily Price Chart (January 2018 to April 2019) (Chart 1)

Since shortly after the Yen flash crash in January, AUDJPY prices had been consolidating in a sideways pattern between 77.50 and 79.85 until April 12.For a few days in mid-April, the path of least resistance appeared to be to the topside for AUDJPY. But it now appears that a "false breakout" condition has emerged, now that AUDJPY price has returned under 79.85.

Compounding the reversal has been the fact that the trendline from the March and April swing lows has been broken. AUDJPY price is now below the daily 8-, 13-, and 21-EMA envelope, while Slow Stochastics has fallen into oversold territory and daily MACD has started to move below its signal line.

In line with a principle of technical analysis that a false breakout from a consolidation often yields a return to the other side of the consolidation (i.e. if prices broke through consolidation resistance and returned into the consolidation, then odds would increase that price would revisit consolidation support). Accordingly, a move back towards 77.50 shouldn't be ruled out.

IG Client Sentiment Index: AUDJPY (April 26, 2019) (Chart 2)

AUDJPY: Retail trader data shows 71.4% of traders are net-long with the ratio of traders long to short at 2.5 to 1. The number of traders net-long is 5.6% lower than yesterday and 27.1% higher from last week, while the number of traders net-short is 18.7% lower than yesterday and 55.5% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUDJPY prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger AUDJPY-bearish contrarian trading bias.

FX TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher, email him at cvecchio@dailyfx.com

Follow him in the DailyFX Real Time News feed and Twitter at @CVecchioFX

2019-04-26 20:17:00

Currency Volatility Could Ignite with EZ GDP, FOMC, US NFP Next Week

Posted: 26 Apr 2019 01:22 PM PDT

CURRENCY VOLATILITY – TALKING POINTS:

Following today's US GDP report, traders will turn their attention to the slew of economic events and data releases on tap next week for further clarity on the market's next direction
Although 1-week implied volatility metrics across the major currency pairs remains subdued, forex market price action is beginning to show signs that volatility could soon turn higher
Take a look at this article for information on How to Trade the Top 10 Most Volatile Currency Pairs

The latest stretch of gains in the US Dollar appears to have stoked forex market volatility over the last few days of trading. However, price action looks to have been in anticipation of Q1 US GDP which was released earlier today. With this data now in the rearview mirror, what risks have potential to propel further currency volatility next week?

FOREX MARKET IMPLIED VOLATILY AND TRADING RANGES

Currency Volatility Could Ignite with EZ GDP, FOMC, US NFP Next Week

First on the list of possible volatility triggers is Japan's Golden Week where the Japanese will observe a consecutive 10-day holiday celebrating the country's emperors among other national events. With Japan's financial markets closed all next week, traders might expect limited liquidity and raises the risk of rampant price swings. In fact, the last time the Japanese markets were closed on holiday while other markets were still open was on the January 3 JPY flash-crash.

Consequently, AUDJPY will be an interesting currency pair to keep an eye on next week. According to 1-week implied volatility measures, AUDJPY traders might expect spot prices to fluctuate between 77.940 and 79.238 with a 68 percent statistical probability. The 1-week implied high and low aligns well with Fibonacci support and resistance which have contributed to the narrow trading range observed since the January 3 flash-crash.

AUDJPY PRICE CHART: DAILY TIME FRAME (NOVEMBER 27, 2018 TO APRIL 26, 2019)

Shifting to hard economic data, the Eurozone is slated to release its Q1 GDP report during Tuesday's session. If the numbers show an improvement in the Eurozone's economic growth and surprise to the EURUSD could attempt to rebound from its recent selloff. On the contrary, if the report fails to provide reasons for optimism, the Euro could continue to come under pressure. The 1-week EURUSD trading range derived from implied volatility priced into forex option contracts estimates that the currency pair will trade between 1.1086 and 1.1230 with a 68 percent statistical probability.

EURUSD PRICE CHART: DAILY TIME FRAME (DECEMBER 26, 2018 TO APRIL 26, 2019)

Later on Tuesday, Canada will also release its GDP numbers and could draw a reaction in USDCAD. Last week, the Bank of Canada rate decision weighed negatively on the Canadian Dollar given dovish language found in the Governing Council's press statement and follow up commentary from Stephen Poloz. If Canada's GDP report echoes timid economic activity in the country, more pain could be expected for the loonie. Also worth noting is the recent downside in oil which might pose as another headwind to CAD upside.

USDCAD PRICE CHART: DAILY TIME FRAME (NOVEMBER 15, 2018 TO APRIL 26, 2019)

Taking the spotlight for the US Dollar will be Wednesday's FOMC decision. Although the Fed is expected to remain on hold according to OIS pricing, Chair Jerome Powell will likely provide markets with an update on the central bank's latest view on monetary policy – particularly in context of the latest US GDP report.

Fed futures are still pricing a 25-bps cut by the end of the year despite the huge upside surprise in first quarter economic growth. Although, the Federal Reserve will likely indicate its relatively hawkish or dovish tilt at this upcoming meeting which could warrant a sizable reaction in the USD. In fact, expected USD price action has rebounded higher shown in the chart below.

DXY US DOLLAR INDEX 1-WEEK IMPLIED VOLATILITY PRICE CHART: DAILY TIME FRAME (APRIL 25, 2018 TO APRIL 26, 2019)

DXY Index US Dollar Price Chart Implied Volatility

To cap off the week, US Nonfarm Payroll data will be released in addition to the ISM Services Index for April. Further improvement in US economic data will likely reduce market expectations for a rate cut from the Fed this year and could boost the greenback. On the contrary, weakness in America's job market could give markets the jitters if this cornerstone of the US economy shows signs of deterioration.

TRADING RESOURCES

– Written by Rich Dvorak, Junior Analyst for DailyFX

– Follow @RichDvorakFX on Twitter

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2019-04-26 20:03:00

FX Price Action Setups in EUR/USD, GBP/USD, USD/CHF and USD/CAD

Posted: 26 Apr 2019 12:42 PM PDT

Forex Talking Points:

– DailyFX Quarterly Forecasts for Q2 have been recently released, and are available directly from the following link: DailyFX Trading Guides, Q2 Forecasts.

– For trading ideas, please check out our Trading Guides. And if you're looking for something more interactive in nature, please check out our DailyFX Live webinars.

– If you'd like more color around any of the setups below, join in our live DailyFX webinars each week, set for Tuesday and Thursday at 1PM Eastern Time. You can sign up for each of those sessions from the below link:

Tuesday: Tuesday, 1PM ET

Thursday: Thursday 1PM ET

Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.

US Dollar Trades to Fresh 2019 High: Time to Reverse or More to Go?

The US Dollar finally broke out. In last week's FX Setups, I asked the question if this was going to be the week that US Dollar bulls took control. This comes after months of digestion with the currency building deeper into a symmetrical wedge pattern, and as looked at in the Q2 technical forecast on the US Dollar, this brought with it bullish potential for the US currency.

Now that prices have set that fresh 22-month high in the US Dollar, the big question is whether buyers will be able to continue the move. Making matters more interesting – next week's economic calendar is absolutely loaded, with an FOMC rate decision on Wednesday, a Bank of England 'Super Thursday' rate decision on Thursday, and then Non-Farm Payrolls on Friday. And those are just the highlights, as the docket is littered with high-impact events that could compel workable price moves in a variety of venues. Below, I look into a series of price action setups across the US Dollar.

US Dollar Holds Resistance at 22-Month Highs

Chart prepared by James Stanley

Bearish EUR/USD on Hold Below 1.1262

Euro bears finally made their move: The range that had been building for the previous five months gave way as USD-strength and Euro weakness saw the world's most popular currency pair break-down to a fresh 22-month low. I had looked into this scenario last week, initially just looking for a move back down to support; but with it came the potential for break-even stop moves that could allow for breakout plays.

Prices pushed down to support around the 1.1120 level, at which point a bit of grind began to develop. That grind held through the Friday open and prices began to tip-higher. This can keep the door open for a further retracement, targeting that prior zone of support for lower-high resistance. This week's high set at 1.1262 can serve as a form of invalidation, and if that theme shows up, then we're likely also looking at scenarios of USD-weakness, at which point other setups (such as USD/CHF or USD/CAD) looked at below could remain of interest.

EURUSD Eight-Hour Price Chart

Chart prepared by James Stanley

Bearish GBP/USD On Hold Below 1.3020

I started looking into short GBP/USD strategies a couple of weeks ago, attempting to anticipate this bearish breakout.

GBP/USD has displayed a similar backdrop of recent, as a round of digestion followed a big move. GBP/USD had a very strong first two months of the year, with volatility increasing around the March open in response to Brexit dynamics. But, as that theme cooled, so did GBP/USD volatility, and the pair then spent the next month building into a descending triangle formation. This type of pattern will often be approached with a bearish aim, looking for the same motivation that's brought-in bears at lower-highs to, eventually, allow for a break through horizontal support.

That finally happened this week as USD broke-out to fresh 22-month highs, and GBP/USD continued all the way down to the first target looked at in last week's FX Setups. This runs around the 1.2900 handle, as two different Fibonacci levels in close proximity offer an element of confluence.

And now that a bounce is developing, the potential for bearish trend continuation, and that prior zone of support from the descending triangle can now be re-utilized as potential resistance. This zone runs from 1.2960 up to 1.3000, and a hold of resistance here can open the door for bearish strategies with stops investigated above 1.3020. Target potential could remain around the same 1.2900, 1.2829, 1.2783 and, longer-term, the 1.2671-1.2721 zone.

GBP/USD Eight-Hour Price Chart

Chart prepared by James Stanley

Bearish USD/CHF: Reversal Potential on Hold Below 1.0250

It's been a wild month in USD/CHF, as the pair pushed-higher off of a Fibonacci level at .9902 to rally up to fresh two-year-highs in a relatively short span-of-time. Prices in the pair tested above the 1.0200-handle this week, and this appears to be around where bears began to show up as Tuesday-Friday brought a continued show of resistance.

For traders looking to fade the US Dollar strength or, more to the point, for traders open to working with reversal scenarios, such a setup may exist in USD/CHF. Traders can investigate risk levels above the highs with targets directed towards the 1.0100 level. Break-even stop moves could be investigated at the first target, at which point secondary target potential exists around the parity level of 1.0000.

USD/CHF Daily Price Chart

Chart prepared by James Stanley

USD/CAD Finds Resistance at 1.3500, Builds Reversal Potential

I had tried to catch the short side of USD/CAD last week, but that didn't work as both USD-strength and CAD-weakness propelled the pair up to fresh three-month-highs. But what did show up soon after was a hit of resistance at the 1.3500 handle, and prices have since started to show tendency for reversal.

This can re-open the door for bearish strategies, and traders looking at risk levels above the three-month-high could couple that with an initial target around the 1.3385 level to aim for a better than 1-to-1 risk-reward ratio.

USD/CAD Daily Price Chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q4 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

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— Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

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2019-04-26 19:00:00

Crude Oil Price Crumbles on Trump Call to OPEC Despite US GDP Beat

Posted: 26 Apr 2019 10:17 AM PDT

CRUDE OIL PRICE – TALKING POINTS:

Crude oil took a nosedive to an intraday low of $62.27/bbl in response to news that President Trump is turning up the heat on OPEC to increase oil supply in hopes of driving prices lower
The Q1 US GDP report could also be contributing to crude oil price action today seeing that underlying details of the data release painted a mixed picture for economic growth despite the headline number beating expectations by a full percentage point
Take a look at this article on How to Trade Crude Oil or check out these Top Crude Oil Facts to expand your trading knowledge
Download the DailyFX Q2 Oil Forecast for our comprehensive outlook

Crude oil tanked over 3 percent to its lowest level since April 5 amid renewed criticism from US President Trump over OPEC and global oil supply. Trump's latest jab at the largest group of oil producing countries is not is his first attempt to put pressure on the petroleum cartel to raise crude output. In fact, Trump's oil tweet a month ago also sent prices swinging lower when he said it is "very important that OPEC increase the flow of oil."

CRUDE OIL PRICE CHART: 5-MINUTE TIME FRAME (APRIL 26, 2019 INTRADAY)

Prior to today's slide lower, markets witnessed a 55 percent surge in oil since the start of the year. The move higher was primarily driven by pledges from OPEC to cut oil production and restore supply and demand imbalances in response to slowing global growth.

Turmoil in Libya and Venezuela as well as the expiration of exemptions to Iranian sanctions have all likely exacerbated the move higher in oil prices. Now, fears are starting to build that the steep ascent in oil prices over the last 4 months could begin to drag economic growth lower. This could be the result of higher oil prices translating into rising input costs on firms and eventually consumers.

The dramatic move in oil today is a bit surprising on the surface, however, considering the massive US Q1 GDP beat. The US economy expanded 3.2 percent in the first quarter which blew past Bloomberg's median consensus of 2.2 percent. Initially, one might expect the news of higher economic growth to boost the case for rebounding global GDP, leading to a similar rise in demand for oil and thus oil prices.

Although, when 'looking under the hood' of the US GDP report, the details appear to be bleaker than the 3.2 percent headline number reported. The better than expected US GDP number was largely driven by a hefty build in inventories, a reduction in imports in addition to higher state and local government outlays – components that generally do not warrant a celebration.

This is also indicated by the lack of conviction in the equity markets and skepticism in the bond markets with the S&P500 only up a mere 0.3 percent after opening up in the red and the US10YR Treasury yield dropping to 2.5 percent.

If markets remain unconvinced that economic fundamentals are turning higher – which appears to only be occurring in the United States while the rest of the world continues to struggle – resurfacing global growth slowdown fears could drag oil prices lower. Furthermore, the downside risk of another Trump tweet at OPEC always remains a possibility.

TRADING RESOURCES

– Written by Rich Dvorak, Junior Analyst for DailyFX

– Follow @RichDvorakFX on Twitter

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2019-04-26 16:46:00

USD Holding at Fresh Highs, Bend or Break?

Posted: 26 Apr 2019 06:37 AM PDT

US Dollar Talking Points:

– The US Dollar set fresh 22-month-highs this week, rallying above resistance in an ascending triangle that's been building for the past six months. The breakout ran aggressively through yesterday's trade, at which point resistance began to build around the 98.32, and this same level has held the highs again this morning, leading to pullback potential as markets trade into next week.

– This breakout in the US Dollar showed prominently with bearish breakouts in both EUR/USD and GBP/USD. Commodity currency pairs such as AUD/USD and USD/CAD may be more interesting for reversal scenarios in the US Dollar, as each market is grasping on to an element of support (AUD/USD) or resistance (USD/CAD) that can remain of interest for USD-reversal strategies.

– DailyFX Forecasts are published on a variety of currencies such as the US Dollar or the Euroand are available from the DailyFX Trading Guides page. If you're looking to improve your trading approach, check out Traits of Successful Traders. And if you're looking for an introductory primer to the Forex market, check out our New to FX Guide.

Do you want to see how retail traders are currently trading Gold prices? Check out our IG Client Sentiment Indicator.

US Dollar Breaks Out to Fresh Highs, EUR/USD and GBP/USD to Fresh Lows

The US Dollar has set a fresh 22-month high, making it an eventful week across FX markets despite a relative dearth of high-impact macro-economic data. A couple of themes that have been building for the past six months finally moved towards some element of resolution, as the US Dollar broke out to fresh highs and EUR/USD broke-down to 22-month lows. Curiously, there wasn't a direct driver pushing the move, and this brings questions around continuation potential as next week's loaded economic calendar awaits.

The US Dollar is holding resistance at fresh yearly highs and yesterday's Daily candle printed as a doji/spinning top, indicative of indecision. When coupled with a really strong move ahead of that print, the potential for pullbacks begins to show, driven by the prospect of buying pressure stalling around levels that haven't been traded at in almost two years.

US Dollar Daily Price Chart

Going into next week, the big question is whether USD buyers step-in to extend the move, forcing a bullish trend scenario to follow this week's breakout. And as looked at in yesterday's webinar, there are a couple of nearby areas of interest to follow for such a theme: The closest runs from Fibonacci levels at 97.86 and 97.94. A bit-lower, that prior area of resistance remains around the 97.70-handle, and for support plays, traders may look as low as 97.50, creating a zone of potential for buyers to show-up to continue the bullish move.

US Dollar Two-Hour Price Chart

USD Strength – Trade it, or Fade it

I had looked into this theme coming into this week, even asking the question in this week's FX Setups whether this would be the week that US Dollar bulls finally broke-out. For that theme, I was looking at bearish breakout potential in both EUR/USD and GBP/USD. But, for USD-weakness, I had also incorporated commodity currency pairs of AUD/USD and USD/CAD, and going into next week – those themes may remain of interest.

In the areas where USD-weakness has not worked, the bar is raised for next week. AUD/USD broke-down to range-support, digging in around the .7000 handle. For traders looking at fading USD-strength for next week, positing that this USD breakout will ultimately end up as a failure, range continuation scenarios can remain attractive in AUD/USD, in essence looking for some element of buyer defense around the .7000 big figure.

AUD/USD Four-Hour Price Chart

USD/CAD Digs into Resistance at 1.3500

In USD/CAD, the pair broke-out to fresh three-month-highs on the heels of this week's Bank of Canada rate decision. Prices soon ran into the 1.3500 psychological level, and similar to USD-looked at above, put in an item of indecision with yesterday's Daily bar. This can also keep the door open for reversal scenarios, and at the very least the risk management of the situation could be somewhat clear, as traders have today's highs holding around a key spot of resistance.

USD/CAD Eight-Hour Price Chart

USD-Strength on Full Display in EUR/USD, GBP/USD

Meanwhile, that USD-breakout has brought fresh bearish breakouts to both EUR/USD and GBP/USD this week. EUR/USD broke below a range formation as Cable sunk below a descending triangle, and given the print of fresh lows, this can keep the door open for continuation scenarios next week, particularly for those looking to play bullish themes in the US Dollar.

In EUR/USD, that area of prior support that had held the lows for almost six full months now becomes resistance potential. This runs from Fibonacci levels at 1.1187-1.1212, and re-tests there can open the door for bearish trend strategies next week.

EUR/USD Eight-Hour Price Chart

GBP/USD Holding Lows Around Confluent Support

GBP/USD also broke below a big support zone this week, but this was an area that had held the lows for the prior two months as opposed to the previous six. This formation was looked at last week as a descending triangle had built-in GBP/USD near-term price action, with support showing from 1.2960-1.3000 and resistance coming from a descending trend-line. The next 'big' area of support on the chart was a confluent zone of Fibonacci levels around the 1.2900 handle, and that has since come in as support over the previous two trading days, leading to pullback potential. That prior zone of support now becomes potential resistance, and at this point, that zone is getting closer to confluence with the bearish trend-line taken off of the late-March swing-highs.

GBP/USD Eight-Hour Price Chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q2 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

— Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

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2019-04-26 13:30:00