Last week’s Forex market was marked by a notable decline in the US Dollar, deviating from its long-term upward trend, and an uptick in US stock markets. This shift saw riskier currencies like the Australian and New Zealand Dollars, as well as the Euro and British Pound, gaining strength against the US Dollar. Influenced by lower-than-expected inflation data from the US and UK, market sentiment leaned towards a possible rate reduction by the Federal Reserve, potentially as much as 0.50% by July 2024.
Despite these trends, the overall economic data doesn’t paint an entirely robust picture, with indicators such as US PPI and Retail Sales coming in lower than anticipated, hinting at a slowing US economy. Additionally, key data like the US Unemployment Claims and the Empire State Manufacturing Index presented a mixed scenario.
Looking ahead, the upcoming week is expected to experience less volatility, with key data releases including the Reserve Bank of Australia’s policy meeting minutes and Canadian CPI figures. These releases, among others, will likely play a significant role in shaping market trends.
In the realm of technical analysis, the US Dollar Index’s bearish trend, indicated by a significant bearish candlestick, is noteworthy. This trend is further supported by speculation around the Federal Reserve’s rate-cutting plans. Conversely, the EUR/USD pair showed bullish signs, closing at a three-month high, although caution is advised due to the suddenness of this rise.
The AUD/USD pair also exhibited bullish signals but with an expectation of short-term bearish retracement or consolidation. The NASDAQ 100 Index continued its bullish trajectory, making it a favorable long-term investment. Lastly, Cocoa futures maintained their strong bullish trend, supported by increasing global demand.
In summary, the best trading opportunities for the coming week are seen in long positions on the NASDAQ 100 Index and Cocoa futures, reflecting an evolving market landscape that presents both challenges and opportunities for traders.