EURUSD still has a negative 2 inflation score after Europe announced lower inflation and the US reported higher inflation. This means that the ECB is likely going to take a less restrictive monetary stance than the Fed.
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Not much has changed for retail. They are still long metals, Russell, and short dollar. Oil is mixed along with gold and US30. The majority short positions are NAS, SPX, UK100, GER30 and USDJPY.
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CHFJPY is touching support on the 4H timeframe after taking a steep fall in price from yesterday's surprise SNB rate cut. Japan's and Switzerland's central banks have now surprised the markets, but in a dovish manner. CHF is working to ease the monetary cycle while Japan is just starting to tighten their policy. If Japan's economy starts to grow, yen demand may as well. -Frank
Читать полностью…GU shows increasing retail sentiment along with declining COT support. The recent downside this week could be a sign that price shifted to the downside already.
-Frank
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GU's score flip could spell bearishness on the pair. After what seemed like a dovish hearing from the Fed yesterday, the score sunk lower to -5 today. Retail is now majority long which is unusual to see. The talks of rate cuts could still fuel a rally against the dollar.
If the dollar flips to a weak sentiment as a result of rate cut expectations remaining unchanged, we could be looking at bullish GU, commodities and indices (and bitcoin).
-Frank
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The US30 is a strong buy on the EdgeFinder now after yesterday's dovish Fed comments. At +7, the index is our strongest bullish score of the big three in the US. Blue chips are happy with yesterday's news since Powell remained optimistic on economic growth while not being worried about inflation.
This suggests that the central bank will not take any action to fight inflation other than keeping rates where they are. Another notable thing Powell mentioned yesterday was that rate cuts are still on the table this year, and we are still likely to expect what they have already forecasted.
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AUDJPY's interest rate score is now at -1 after Australia decides to keep their cash rate unchanged at 4.35% while the BOJ increased theirs to +0.10% which marks the first time Japan has been out of the negative interest rate territory in over a decade. The monetary policy shift could affect all currencies trading against the yen now as the BOJ is now in a tightening phase while the rest of the world is waiting to start rate cuts.
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Gold is down on the day but still holds itself above the previous all-time highs at $2,148. Although the dollar is strong, it appears that demand for gold hasn’t faded yet. If price can hold itself above support after FOMC, the uptrend may continue. It all depends on what the Fed is going to say tomorrow regarding economic strength, inflation and interest rate projections.
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COT has kind of flatlined on bullish sentiment while retail has gone heavily long in the past week. This is an indication that EURUSD will probably experience continued weakness as a result.
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A -2 score on USDJPY's interest rate category is due to the BOJ expecting higher rates over the next few quarters while the Fed remained steadfast in their rate cut projections this year.
- Frank
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It now appears that retail traders are bullish on crypto, metals and currencies against the dollar. Oil remains mixed, gold mixed. There is significant short interest in the retail crowd on the US and foreign indices.
-Frank
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Gold flew higher to unexplored territory this morning but only to pull back near the open. Metals and indices have been overextended for some time now, but it still might not be the end of the rally. Investors were concerned of a more hawkish Fed statement yesterday which didn't arrive.
If price can stay above support at $2,148, it may continue to move back towards today's highs at $2,222. The 2 year yield is up today, however, which could be driving the metals back lower. -Frank
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AUDUSD is the strongest bearish score on the EdgeFinder today at -7. Price has flipped further into bearish territory this morning as price tests support on a rising trendline on the 1D timeframe. After keeping rates unchanged in Australia, investors wait for the FOMC decision which will likely remain at 5.5% in the US. What people are looking for now are key phrases to see how concerned the Fed is about the recent rise in inflation and what they might do from here. If they deliver a hawkish tone, it might lead to lower prices for AU.
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BOJ’s surprise rate hike was actually bearish news for the yen as other currencies trading against it catch more demand. Despite the rate hike to take Japan out of negative interest territory for the first time since 2007, the yen still appears weak. This is likely due to Japan’s inflation rate reaching 2.2%. Falling inflation is good for a currency, but the economy will need to start picking up from here.
-Frank
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