All Eyes on Today’s U.S. PCE

Market Summary

The release of the U.S. GDP data yesterday sent shockwaves through the financial markets, as the GDP price index surpassed both forecasted and previous readings. This has prompted market speculation that the U.S. PCE index, scheduled for release later today, will also exceed expectations, dampening prospects for Fed interest rate cuts. In response to the upbeat economic data, U.S. long-term treasury yields surged to above 4.7%, marking the highest level since last November, with expectations of a corresponding strengthening of the dollar.

Despite concerns stemming from the robust economic data and hawkish sentiments regarding the Fed, the U.S. equity markets experienced a lift from strong earnings performances by major tech companies. Notably, Meta Platforms and Alphabet Inc. surpassed estimations, injecting optimism into the market.

Meanwhile, the Japanese Yen has continued to trade at critically weak levels against its major counterparts. Traders are eagerly awaiting the Bank of Japan’s monetary policy statement for insights into the central bank’s next moves in terms of monetary policy.

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Current rate hike bets on 1st May Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (97%) VS -25 bps (3%)  

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Market Overview

Economic Calendar

(MT4 System Time)

Source: MQL5  

Market Movements

DOLLAR_INDX, H4

The Dollar Index faced downward pressure following the release of disappointing US Gross Domestic Product (GDP) figures, which plummeted to a nearly two-year low last quarter. With GDP falling to 1.6%, well below market expectations of 2.5%, speculation mounts over potential Federal Reserve rate cuts to stimulate economic growth. Attention now shifts to the forthcoming US Core Personal Consumption Expenditures (PCE) report for further market insights.

The Dollar Index is trading lower following the prior breakout below the previous support level. MACD has illustrated increasing bearish momentum, while RSI is at 41, suggesting the index might extend ist losses since the RSI stays below the midline. 

Resistance level: 105.80, 106.35

Support level: 105.25, 104.75

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XAU/USD, H1

Gold prices saw a modest rebound amidst a backdrop of continued uncertainty surrounding the US economy. The recent decline in the US Dollar, prompted by a series of lacklustre economic reports, leaves investors cautiously awaiting the US Core PCE report for clearer trading signals. With the Dollar’s vulnerability, gold’s safe-haven appeal remains a key focus for traders navigating market volatility.

Gold prices are trading higher while currently testing the resistance level. However, MACD has illustrated increasing bearish momentum, while RSI is at 54, suggesting the commodity might experience technical correction since the RSI retreated from overbought territory. 

Resistance level: 2330.00, 2360.00

Support level: 2300.00, 2270.00

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GBP/USD，H4

The GBP/USD pair has surged past its previous consolidation range, signalling a bullish trend for the pair. However, caution is advised for traders. The recent U.S. GDP data, which exceeded market expectations yesterday, has ignited perceptions of a hawkish Federal Reserve. This development has driven U.S. long-term treasury yields higher. As treasury yields climb, the dollar is anticipated to strengthen, potentially exerting downward pressure on the GBP/USD pair. This complex interplay of economic indicators suggests a volatile environment for the currency pair going forward.

The GBP/USD has broken above the consolidation range, suggesting a bullish bias for the pair. The RSI is on the brink of breaking into the overbought zone, while the MACD continues to surge after breaking above the zero line, suggesting that the bullish momentum remains strong. 

Resistance level: 1.2540, 1.2660

Support level: 1.2440, 1.2370

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EUR/USD，H4

The EUR/USD pair experienced a slight uptick in yesterday’s session, although the bullish momentum appeared to wane. Today’s focus is on the U.S. PCE data, which will provide insight into the strength of the dollar and its potential impact on the pair. However, yesterday’s upbeat GDP figures have fueled expectations of a hawkish stance from the Federal Reserve, leading to speculation of a delay in implementing any rate cuts by the Fed. This anticipation has added complexity to the market dynamics surrounding the EUR/USD pair, heightening uncertainty among traders.

The pair continues to trade with its bullish trajectory with strong bullish momentum. The MACD continues to edge higher above the zero line while the RSI is on the brink of breaking into the overbought zone, suggesting the bullish momentum remains strong. 

Resistance level: 1.0775, 1.0866

Support level: 1.0630, 1.0560

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Nasdaq，H4

US equity markets, particularly the tech sector, showcased resilience fueled by robust corporate earnings reports. Positive performances from industry giants like Microsoft Corp and Alphabet Inc’s Google parent company bolstered investor confidence in Wall Street. Despite disappointing GDP figures, US Treasury yields retreated, further enhancing the allure of the US equity market.

Nasdaq is trading higher, following the prior rebound from the support level. MACD has illustrated increasing bullish momentum, while RSI is at 43, suggesting the index might extend its gains since the RSI rebounded sharply from oversold territory. 

Resistance level: 17850.00, 18430.00

Support level: 16975.00, 16230.00

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AUD/USD, H4

The AUD/USD pair has exhibited a cup-and-handle price pattern, indicating a bullish inclination for the pair. This bullish sentiment has been bolstered by the positive Australian CPI reading and the hawkish stance maintained by the Reserve Bank of Australia. However, traders should remain vigilant as today’s U.S. PCE reading may serve as a pivotal factor influencing the pair’s direction. The outcome of this economic data release could introduce new dynamics to the AUD/USD pair, potentially impacting its trajectory in the short term.

The pair has formed a cup-and-handle price pattern, which suggests a bullish bias. The RSI remains hovering in the upper region, while the MACD remains flat at the elevated level, suggesting the pair remains trading with bullish momentum. 

Resistance level: 0.6585, 0.6640

Support level: 0.6450, 0.6400

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CL OIL, H4

Crude oil prices surged amidst escalating geopolitical tensions in the Middle East, as fears of potential supply disruptions intensified. Israel’s airstrikes on the Southern Gaza City of Rafah, coupled with preparations for a possible invasion, amplified concerns over oil supply stability. Additionally, weakened US economic data contributed to a decline in US Treasury yields and Dollar demand, further bolstering oil prices.

Oil prices are trading higher following the prior breakout above the previous resistance level. MACD has illustrated increasing bullish momentum, while RSI sia t 59, suggesting the commodity might extend its gains since the RSI stays above the midline. 

Resistance level: 84.95, 87.50

Support level: 83.40, 80.45

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