Market Overview
- The forex market has seen significant movements, with the EUR/USD pair starting the week strong due to sustained USD selling. This is largely influenced by trade uncertainties and expectations of a Fed rate cut.
- Despite a dovish rate cut from the ECB last week, the EUR/USD pair remains bullish. The weakening of the USD is attributed to trade policy uncertainties and Fed Chair Powell's cautious stance.
- Trump's tariff announcements have also negatively impacted the USD, while supporting the EUR/USD pair.
- Gold prices have risen to around $3,350 in Monday’s early Asian session, up 0.80% due to uncertainty over Trump’s tariffs on imports into the US.
- Investors are turning to safe-haven assets like Gold amid tariff uncertainty and geopolitical tensions, leading to a 25% increase in Gold prices since January.
Fundamental Analysis
- Major economic events this week include speeches by ECB President Lagarde and FOMC members, as well as the release of flash PMIs.
- Central banks, including China, are increasing their Gold reserves. The Fed's Chair and San Francisco Fed President's comments could boost the Greenback and weigh on the USD-denominated commodity price.
- Traders are awaiting the PBoC interest rate decision, expecting no change. Uncertainty surrounds the timing of the RBA's next rate cut, with markets pricing in a cut in May.
Technical Analysis
- The EUR/USD pair remains bullish despite last week's dovish rate cut from ECB. The pair is supported by warnings about US tariffs and trade uncertainties.
- Gold (XAU/USD) has seen a rise due to uncertainty over Trump’s tariffs on imports into the US. However, hawkish remarks from Fed may limit its upside.
- The AUD/USD pair rises to around 0.6380 in Asian trading, supported by a weaker US Dollar and Trump's exemption of key technology products from new tariffs. However, the dovish bets of the RBA could weaken the Aussie against the USD in the short term.
- The USD/CNH is consolidating around 7.3000 and the IDR is stabilizing after dropping to historical lows against the USD.
Conclusion
- The market continues to be influenced by trade uncertainties, central bank decisions, and geopolitical tensions.
- Investors are turning to safe-haven assets like Gold amid these uncertainties.
- Traders should closely monitor upcoming speeches by central bank officials and economic data releases for potential trading opportunities.
