Forex news

Index futures are higher ahead of the open, whilst a bounce on AUD/USD during Asian trade teases with the prospects of a potential short squeeze. And with EUR/USD holding above its YTD low whilst the S&P 500 held above a key trendline and 200-day EMA on Wednesday, perhaps a small short squeeze is not such a crazy prospect after all.

AUD/USD fell to its lowest level since November on Wednesday as it buckled under the strain of a stronger US dollar and yields. With key support levels showing the potential to act as resistance, a move down to 63c could now be on the cards.

The DAX finds itself at a 6-month low with Wall Street indices, with DAX futures also pointing to a weak open. Yields need to pull back for it to stand any chance of recovering, and if they do it may even take some steam out of the USD/CHF rally which is trying to tally up its 12th consecutive bullish day.

Gold prices suffered their worst day in 8 weeks on Tuesday with spot prices falling below the 200-day EMA and closing on the key $1900 level. But with gold lower against a basket of currencies, it shows gold is weaker and it's not just a case of a stronger USD or yields.

The EUR/USD has been among a growing number of major FX pairs breaking to fresh multi-month lows. The euro’s latest losses come after the Dollar Index ended higher for the tenth consecutive week and as risk appetite remained low across financial markets, with major indices breaking further lower this morning. The EUR/USD will be among the key FX pairs to watch this week.

The commitment of traders (COT) report shows how large speculators are positioned across futures markets on the CME exchange.

Weak PMIs on Friday were the latest economic data sets to warn of a slowdown and weighed on global indices accordingly. The S&P 500 suffered its worst week in six months and shows the potential to fall further. Although support levels nearby suggest it may try to bounce head of its next leg lower.

At the most basic level the Fed delivered what was expected; another policy pause with the potential for further hikes. The opening paragraph tipped noted an economy which is “expanding at a solid pace” with a slower but “strong” job growth and elevated inflation. There’s nothing remotely dovish there. And then we look at the numbers…

The EUR/USD and other dollar pairs will be in sharp focus for FX traders as the attention turns to the upcoming Fed decision in a few hours’ time. No rate hike is expected, but the market is pricing in about even odds of another rate increase before the year is out.

The GBP/USD will come into sharp focus over the next couple days, with two pivotal events on the horizon: the FOMC and BoE rate decisions. Additionally, traders are anticipating the release of UK CPI and retail sales data, as well as global PMI figures this week. These developments collectively have the potential to shape the near-term GBP/USD outlook. UK CPI could sway BoE decision, with the UK central bank likely to mimic ECB's dovish hike. Meanwhile, the FOMC is likely to go for a hawkish hold.

Welcome to Technical Tuesday, a weekly report where we highlight some of the most interesting markets that will hopefully appease technical analysts and traders alike. In this edition of Technical Tuesday, we will analyse the EUR/USD, Gold and the Dollar Index.

The Canadian dollar has continued to strengthen alongside oil prices in recent days, sending USD/CAD to a near 5-week low, GBP/CAD beneath its 200-day EMA and CAD/JPY to within striking distance of its 2022 high. Today’s Canadian inflation data could prove volatile for USD/CAD ahead of tomorrow’s FOMC meeting.

EUR/USD fell for 9th week by Friday's close, its worst weekly run since 1997. Yet whilst that could mean it is 'owed' a bounce, history suggests such bearish runs are later accompanied by further losses, as macro themes can trump technicals during such times. And that places this week's FOMC meeting into focus, where we discuss the likelihood that it might be more dovish than markets currently are pricing in.

Technical analysis shows WTI may be getting stretched while USD/CAD could have further to fall...

The GBP/USD is in focus ahead of this week’s key events: FOMC and BoE rate decisions. We also have UK CPI and retail sales, as well as global PMI figures to look forward to this week. The BoE is likely to deliver a final 25 bps hike, while FOMC is seen holding policy unchanged. The GBP/USD could be heading to low 1.20s in this busy week.

The USD is on the cusp of flipping to net-long exposure among G10 currencies according to data compiled by IMM (International Monetary Market). And despite the resurgence of US dollar strength, oil continues to perform well and market positioning is looking increasingly bullish for the weeks or even months ahead.