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Welcome to another edition of Forex Friday, a weekly report in which we highlight selected currency themes. In this week’s report, we will discuss the Japanese yen, US dollar and look ahead to the next week.

DAX drops to test key technical support area as Wall Street is spooked by latest inflation data, further raising doubts over Fed's ability to cut rates. Earnings from Microsoft and Alphabet to come after the bell.

Gold outlook remains fundamentally supported in the long term as discussed in this article. In the short-term, traders are awaiting the release of US GDP and Core PCE data this week, ahead of NFP next week. Meanwhile, technical analysis shows the metal is finding some renewed support around its 21-day exponential average.

Disparity between US and Eurozone PMI data bodes well for euro. For now, the US dollar has rebounded slightly ahead of GDP and core PCE data. EUR/USD technical analysis shows rates testing a pivotal area circa $1.07 - a potential break above here would be ideal for the bulls.

DAX rises with German IFO business sentiment data in focus. USD/JPY inches higher despite intervention threats and ahead of US durable goods orders.

It’s not just AUD/USD and the RBA interest rate outlook that have been shaken up by Australia’s hot March quarter inflation report with the Australian dollar gaining sharply against the crosses, especially those currencies whose central banks are still expected to ease monetary policy this year.

Momentum may have turned higher for bitcoin this week, yet it lacks the trading volumes usually associated with a strong rally.

The US 2-year bond yield remains support, which is capping the yield at 5% and weighed on the US dollar. And that helped AUD/USD rise for a second day ahead of a key AU CPI report.

Whether you want to call it a bullish hammer, dragonfly doji, false break or morning star, the price action on the AUD/USD daily suggests the path of least resistance is higher in the near-term.

Crude oil demand outlook will come into a sharp focus this week with the release of the global manufacturing PMI data, US GDP and the Fed’s preferred measure of inflation this week. Still, Middle East tensions remain the key driver of short-term price action. Meanwhile, WTI technical analysis suggests the longer-term trend is still bullish.

US GDP, Core PCE and BoJ policy are among the risk events this week for the USD/JPY currency pair, as the focus turns to sticky inflation and elevated interest rates narrative from Middle East concerns for now. USD/JPY technical analysis point to a potential rally above 155.00.

Divergent economic and monetary policy outlooks for the US and UK continue to weigh on GBP/USD, making the case for downside a far easier sell than for upside right now.

The inverse relationship between bond yields and US dollar with the gold price has broken down in 2024, meaning technicals and inflation expectations are arguably a more important driver right now.

US dollar analysis: Focus turns to sticky inflation and elevated interest rates narrative as markets regain their poise – for now – as Iran downplays the impact of Israel's strikes. The EUR/USD and USD/JPY will be in sharp focus with global PMIs and BoJ policy among other risk events coming up next week.

WTI crude oil was up over 4% during the Asian session on reports that Israel’s middles had struck a site in Iran, further fans fears of a broader-scaled war in the middle East.

The US dollar index recouped some of Wednesday's losses and is now tapping 106, whilst the US 2-year yields considers a break above 5%.

S&P analysis: As markets have started Q2 poorly, amid interest rate uncertainty and raised geopolitical risks, investors are relying on earnings to provide boost, starting with Netflix today. S&P 500 technical analysis suggests more losses could be on the way, with 5,000 on the bears' radars.