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Weekly outlook key points

General Outlook:

  • Markets are still coming to terms with the dovish move from the Fed. In the absence of little significant US data and a shortened week due to the Easter holiday it is a quiet start to the week.

US trade weighted dollar

  • FX – US dollar could be set for a period of underperformance following the dovish Fed. EUR/USD is technically positive and set up to test $1.1375 and possibly the range high $1.1465. GBP/USD will be torn between a potentially weaker dollar and the threat of Brexit following internal UK Conservative Party ructions. USD/JPY is under downside pressure and is struggling to hang on to key support at 111.00. Commodity currencies should be supported by the accommodative Fed.
  • Indices – A dovish Fed should be positive for equities but Yellen’s concerns over global growth could be a concern. German DAX is holding on to uptrend gains and is set to test 101,122/101,165 resistance. S&P 500 is maintaining its strong momentum and is on course to test next resistance 2082, whilst 2000/2010 is supportive. FTSE 100 has struggled for the past month with resistance 6200/6235 and concern over faltering momentum.
  • Commodities Gold should be supported by a dovish (dollar weakening) Fed, but technically the momentum continues to wane in the rally. Key support at $1225. Oil is still a driver of market sentiment and the dovish Fed should be a positive; whilst the Doha meeting for OPEC/Non-OPEC on 17th April also a positive. WTI has strong support c. $36.25 with Brent Crude support at $38.25.

Key Economic Calendar events due this week:

Tue: Eurozone Flash PMI, UK CPI, German Ifo and ZEW; Wed: US New Home Sales, EIA oil inventories; Thu: UK Retail Sales, US Durable Goods, US Flash PMI, Japan CPI

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