Weekly Market Flash

EUR/USD

EUR/USD cross builds on last week's sharp bounce from the vicinity of the 1.06014 level/ over five-month low and gains positive traction for the second successive day on Monday. The major currency pair trades firmly above the 1.06600 level during the Asian session to kickstart the week on the right foot and set the tone for a second weekly gain as concerns regarding potential escalation in Middle-East tension seem to have subsided, lending further support to the eurozone currency. Looking ahead this week, EUR/USD price action will be defined by two key U.S. reports: the Quarter-One GDP report and the Core PCE Price Index report. The two key reports would ignite market volatility, shape investor sentiment in the coming days, and impact the U.S. dollar's strength, providing directional impetus for the major currency pair.

Key levels to look at this week:

GBP/USD

GBP/USD pair rose slightly on Monday during the Asian session, rebounding from over a five-month low/1.23628 level, but trades with less bullish conviction as disappointing retail sales data released last week combined with the Bank of England moving close to pivoting to a looser stance continues to weigh on the cable. Despite this, news that tensions in the Middle East have subsided, lending some support to the Great British Pound as investors await key U.K. and U.S. releases set for release this week. The first half of the week features U.K. and U.S.PMI data. The second half of the week is set to drive price action this week, with U.S. GDP (QoQ) (Q1) and Core PCE Price Index (MoM) taking centre stage. In the event of an upside surprise in both data reports, investors are likely to cling to the idea that the U.S. economy is running at full speed and that inflation would be hard to control, paving the way for the Fed to keep rates higher for longer.   

Key levels to look at this week:

USD/JPY

USD/JPY pair rose modestly above the 154.600 mark on Monday during the Asian session to stay close to a 33-year high/154.787 level last touched on Tuesday last week as a generally stronger U.S. dollar supported by firm hawkish Fed expectations continue to weigh on the Yen as markets continue to watch on the sidelines events surrounding the Middle-East war while awaiting key U.S. macro releases and Bank of Japan Interest rate decision set for release during the second half of the week. That said, the greenback will be guided by the release of the U.S. GDP (QoQ) (Q1) on Thursday and the Core PCE Price Index (MoM) on Friday. Any upside surprises on these releases will strengthen the greenback and, in turn, help lift the major currency pair price further upward. However, fears of intervention by authorities on Friday continue to support the Yen and may help limit further USD/JPY gains.

Key levels to look at this week:

XAU/USD (Gold)

Gold (XAU/USD) price retreats further from its all-time high/$2431.31 level and moves below the $2370 an ounce level on Monday during the Asian session amid easing tensions in the Middle East. Noteworthy, Gold rose last week to a fresh all-time high, breaching the $2400.00 mark for the first time in history, as rising geo-political tensions in the Middle East as a result of Israel's retaliatory attack on Iran sparked fears of a broader regional war that saw investors flock to safe-haven assets, in turn benefiting the precious yellow metal. Gold is further pressured by firm hawkish Fed expectations bolstered by robust U.S. data and hawkish Fed comments. Markets now feel convinced that the Fed will delay cutting rates and prolong its hawkish stance through 2024, which remains supportive of rising U.S. Treasury bond yields and weighs heavily on the non-yielding bullion. In the future, gold price action will be driven by two key U.S. macro releases set for release later this week. U.S. GDP (QoQ) (Q1) will headline markets on Thursday as the Core PCE Price Index (MoM) -the Fed's preferred inflation gauge takes centre stage on Friday.

Key levels to look at this week:

US500 Index

The S&P500 futures index (US500) rose slightly on Monday during the Asian session, supported by slight strength in stocks in the communication services and financial sectors as markets attempted to regain their lost ground following last week's heavy losses orchestrated by a tech-led selloff. As of press time, futures tied to the US500 index rose around 0.12% (5.9 points) to trade at the $4986.7 level. The main index faces heavy headwinds from increased market bets that the Fed will delay cutting rates and prolong its hawkish stance through 2024. This comes from robust U.S. data and hawkish Fed official's comments. The S&P 500 index's upward trajectory this week now hangs on upcoming key U.S. macro releases set for release later this week. U.S. GDP (QoQ) (Q1) will be the first one to be released on Thursday, followed by the Core PCE Price Index (MoM) - the Fed's Preferred inflation gauge on Friday. Earnings reports from big tech companies such as Tesla (TSLA), Microsoft (MSFT), Meta (META), and Google (GOOG) will also headline markets this week.

Key levels to look at this week:

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