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By eFXdata  —  May 29 - 11:10 AM

Bank of America (BofA) has shared insights into 14 technical strategies based on historical performance data, revealing a variety of potential investment patterns. Key findings include:

  1. Golden Cross: This event, when the 50-day moving average (MA) crosses above the 200-day MA, tends to precede rises in the DXY (Dollar Index) 65-79% of the time, typically 20-80 days later. The S&P 500 (SPX) also tends to deliver strong returns 30, 65 and 195 days post Golden Cross, with an uptrend observed 75% of the time.

  2. Death Cross: When the 200-day simple moving average (SMA) is declining, the DXY has historically been lower 11 of 13 times 5-25 days later. Ten-year US Treasury yields often rise 65-76% of the time 45-60 days post Death Cross.

  3. Ichimoku: In forex markets, bullish (bearish) signals occur when the conversion line crosses above (below) the base line with a green (red) cloud. High success rates have been observed in USDKRW, USDINR, NZDUSD, USDTHB, and USDZAR pairs under these conditions.

  4. DMI with ADX: In G10 forex, bearish DMI crosses with an ADX below 15 or spot below the 50-week SMA have historically signaled downtrends.

  5. Bollinger Bands: G10 forex has shown a tendency to breakout more than mean-revert when price first exits a 26-week band, with signals being more prominent when the USD weakens.

  6. TD Sequential™: Historically, USDSEK often rises 72% of the time 5 weeks after a TD Setup 9 weekly buy signal below the 100-week SMA. GBPUSD also tends to rise 80% of the time 5 weeks post a TD Countdown 13 weekly buy signal.

  7. Breadth Thrust: The S&P 500 has typically traded higher 82% of the time 250 days after a breadth thrust, with average and median returns of 17.5% and 21.2% respectively.

  8. Coppock Curve: Since the 1930s, when the Coppock Curve ticks up while below zero, the S&P 500 has averaged 12-month returns of 11.1%, with median returns of 16.4%.

While these strategies provide historical insights, BofA reminds investors that past performance is not indicative of future results.

BofA Global Research
By eFXdata  —  May 29 - 09:30 AM

Credit Agricole's month-end fixing model indicates neutral portfolio-rebalancing flows given this month's weaker global equity markets and the USD's broad outperformance in FX. The most significant signals from the model point to a buying position for USD against JPY, and a selling position for USD against SEK.

The model also notes that market capitalisation and FX performance adjustments suggest these neutral flows. However, Credit Agricole's corporate flow model anticipates EUR buying at the end of April.

Despite these indications, there is no trade recommendation this month, primarily due to the absence of a signal from the month-end rebalancing model.

Crédit Agricole Research/Market Commentary
By eFXdata  —  May 29 - 08:30 AM

Goldman Sachs remains committed to its short EUR/GBP position, despite an unexpected market reaction to the higher-than-anticipated April core inflation in the UK. The bank suggested that the market response was more in line with Sterling's risk sentiment beta rather than doubts over the policy commitment's credibility.

Analysts at Goldman Sachs also note that the stronger inflation stemmed from contracts resetting in April, often linked to last year's inflation. While this might allay fears of runaway inflation, it underscores the mechanical inflation persistence the Bank of England aims to tackle.

Given the significantly upgraded economic outlook, persistently high inflation, and an extremely tight labour market, Goldman Sachs believes there's a strong argument for more decisive action to curb inflation and bolster the currency. The bank maintains its short EUR/GBP trade recommendation, targeting 0.86.

Goldman Sachs Research/Market Commentary
By Peter Stoneham  —  May 29 - 06:25 AM
  • U.S. debt ceiling deal news drags on USD: USD/JPY off its 140.91 trend high

  • Though some long-liquidation noted, core USD longs, JPY shorts to remain

  • Offshore interest in Japanese equities still eyed, hedging to continue

  • JPY cross off too with USD/JPY, some from fresh multi-week/month highs

  • Technically, dollar overbought versus yen and trend under scrutiny

  • Overbought conditions on the daily RSI (72.84 last week)

  • Weekly action failed to breach the Ichimoku cloud top, currently 141.97

  • Fourteen week bullish momentum also fading and nearing neutral values

    For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  May 29 - 05:55 AM
  • Holiday markets limiting outright direction

  • Sterling found its feet Friday and posted its first bull close since May 19

  • Heavy going early Monday and recovery from 1.2308 s/t trend low stalling

  • Can't draw firm conclusions until markets return to full strength

  • Pound under performing despite a fall in the dollar vs its basket

  • Safety flows ebb following U.S. debt ceiling news but GBP not benefiting

  • Technically, sterling needs to climb above a cluster of resistance points

  • Daily cloud at 1.2403 and converging 10-55DMAs at 1.2407-11

    For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  May 29 - 04:30 AM

Change to headline

  • Dollar relaxing its grip as safety flows ebb after U.S. debt deal news

  • Technically, signs the EUR/USD bear market is losing momentum

  • Tight Doji candle price action Friday hinting at indecision

  • Still respecting the underlying bear trend but correction risk is high

  • A key week for the dollar with major data releases due

  • U.S. average earnings and payroll data Friday: ramifications for Fed policy

  • Inflation data also due before the next FOMC: hike bets increasing

  • EUR/USD minimum correction of 1.1096-1.0702 Apr. 26-May 26 drop at 1.0795

    For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  May 29 - 03:40 AM
  • Late Friday pullback keeping our 1.2380 short play in the game

  • Long upper candle shadow highlighting sterling's failure to correct higher

  • A positive start Monday with fading 14-day bearish momentum a concern

  • A minimum correction of the 1.2690-1.2308 drop is at 1.2396

  • Converging 10 and 55DMAs are at 1.2407-11

  • Daily cloud also in the mix at 1.2403

  • Upside risk but we lean bearish

    For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  May 29 - 02:20 AM
  • Friday Doji candle warned of a potential direction change

  • Early Monday gains add to the reversal risk

  • We are short from 1.0810 for 1.0660 with a trailing stop at 1.0765

  • Minimum correction off the 1.1096-1.0702 Apr. 26-May 26 drop is at 1.0795

  • Possible base in place at 1.0702

  • We lean bearish while below 1.0781-1.0796 resistance band

  • The 10DMA, Fibo and daily cloud base resistance band make up that resistance

  • Weeklies remain strongly bearish

    For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Ewen Chew  —  May 29 - 01:35 AM
  • AUD/USD backpedals to 0.6545 from Mon peak 0.6558

  • Shorts can relax if it ends below 0.6547 resistance

  • That will keep it under 61.8% Fibo, preserve bearish bias

  • That would also keep Bollinger downtrend channel in play

  • FX market reaction to US debt deal hopes fizzle slightly

  • Stocks still up in Asia but gains trimmed; S&P futures +0.3%

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  May 28 - 11:40 PM
  • +0.05%, as the safe-haven U.S. dollar eases a touch, with E-mini S&P +0.3%

  • Safe-haven USD caught between risk 'on' U.S. debt deal - hawkish Fed outlook

  • The UK, much of Europe, and the U.S. are on holiday - likely quiet offshore

  • Daily momentum studies, 5, 10 & 21-day moving averages head lower

  • 21-day Bollinger bands fall - negative setup - base remains vulnerable

  • 1.2321 NY low, then last weeks 1.2308 base are initial supports

  • Friday's 1.2395 London high then 1.2406 10 DMA are first resistance

    For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By John Noonan  —  May 28 - 11:25 PM
  • AUD/USD gapped to 0.6558 at the open but quickly retraced back to 0.6521

  • Early high was a knee-jerk reaction to news on US debt ceiling deal nL1N37O057

  • It grinded higher when Tokyo bought AUD/JPY and early equity markets rallied nL1N37Q00B

  • AUD/USD traded to 0.6544 before settling around 0.6535 into the afternoon

  • Sentiment underpinned by 3% rally in Dalian iron ore & 2% gain in Lon Copper

  • Overall, the reaction to debt ceiling agreement was muted

  • Holidays in much of Europe and US dampened activity in Asia

  • AUD/USD support is at Friday's 0.6490 low where buying is tipped

  • A break below 0.6480 targets the 76.4 of the 0.6170/0.7158 move at 0.6403

  • Resistance is at the 10-day MA at 0.6595 with offers tipped at 0.6560/70

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  May 28 - 08:35 PM
  • Off 0.15%, with the USD +0.1% - E-mini S&P +0.4% after U.S. debt deal

  • Hawkish Fed expectation after stronger U.S. data last week supports the USD

  • Public holidays in much of Europe will reduce liquidity - USD to lead

  • Spain's conservative PP elbows Socialists out in regional elections

  • Charts; 21-day Bollinger bands and momentum studies head lower

  • 5, 10 & 21-day moving averages track south - a negative trending setup

  • 1.0702 NY low and 1.0653 76.4% of the 2023 rise are initial supports

  • 1.0758 European top Friday and 1.0779 10-DMA, are the first resistance

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  May 28 - 07:35 PM
  • Steady after closing up just 0.05% in a choppy session on Friday

  • UK, US French and German holiday today - response to U.S. debt deal key

  • U.S. dollar and risk appetite will likely lead sterling in Asia

  • Daily momentum studies, 5, 10 & 21-day moving averages head lower

  • 21-day Bollinger bands slide - the base remains the weak side

  • 1.2321 NY low, then last weeks 1.2308 base are initial supports

  • 1.2395 London high then 1.2406 10 DMA are first resistance

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By John Noonan  —  May 28 - 07:00 PM
  • EUR/USD edging lower to 1.0720 after closing Friday +0.7% at 1.0732

  • FX market not reacting to tentative US debt ceiling deal agreed to Saturday nL1N37N1FC

  • E-mini futures are up 0.44% in early trading - but reaction is measured

  • Market didn't price in the possibility of default - so reaction is limited

  • Focus in back on central bank expectations and key data

  • EUR/USD trending lower with the 5, 10 & 21-day MAs in a bearish alignment

  • Resistance is at 10-day MA at 1.0779 and break would ease downward pressure

  • Support is at the 76.4 of the 1.0516/.10196 move at 1.0653

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Krishna K  —  May 28 - 06:10 PM
  • AUD/USD to remain under pressure in Asia as Fed rate expectations repriced

  • Rising U.S. yields weigh as traders raise bets on higher-for-longer rates

  • Robust U.S. economy, sticky inflation reduce expectations for a Fed pause

  • McCarthy, Biden predict Congress will pass debt ceiling deal

  • Faltering China economic recovery, weak CNY undermine AUD

  • Relief rally in commodities may support AUD in s/term; copper up 2.6% Fri

  • Support 0.6485-90, 0.6445-50, resistance 0.6550-60, 0.6580-85

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Burton Frierson  —  May 26 - 03:55 PM

Repeats with no changes

  • EUR net spec long down to 173,736 versus 187,089 the previous week to Tuesday

  • JPY short 80,660 versus 64,791

  • AUD short 49,081 versus 54,594 the previous week

  • GBP long 11,589 versus 12,593

  • CHF short 903 versus 1,859; CAD short xxx versus 42,990

Refinitiv IFR Research/Market Commentary
By Randolph Donney  —  May 26 - 01:40 PM

The dollar index rose to a two-month high on Friday, bidding to close a strong week in robust fashion as an unexpected acceleration in core PCE inflation underpinned the increased betting on further Fed tightening and left EUR/USD bulls facing technical difficulty.

A daily doji candle Friday, falling monthly RSI and price action mired below the daily cloud highlighted EUR/USD’s mounting downside risks.

Meanwhile, bulls were firmly in charge of USD/JPY, which solidified its foothold above 140, with advances toward targets above 142 likely to be determined by the prospects of 10-year U.S. Treasury yields surpassing key levels that traded before the regional banking crisis around 3.9% and 4.0%.

With markets focused on Washington, the White House and congressional Republicans sought to put the final touches on a deal to raise the U.S. government's $31.4 trillion debt ceiling for two years while capping spending on many government programs, according to a U.S. official.

Core PCE prices rose 0.4% m/m and 4.7% y/y in April, both up a tenth from the previous month exceeding the Reuters consensus forecast by the same margin.

Consumer spending jumped 0.8% last month, accelerating from an upwardly revised 0.1% in March and zooming past the forecast of 0.4%.

U.Mich consumer sentiment rose unexpectedly while one-year inflation expectations fell three tenths to 4.2% and five-year expectations softened one tenth to 3.1%.

The non-farm payrolls report will be the top data release next week.

Movement in U.S. Treasury yields ranged from a rise of 7bp in two-years, flat in 10-years and a fall of 3bp in long bonds, with the U.S. fixed income market set for an early close ahead of the Memorial Day holiday.

This pushed the 2s-10s curve to a more sharply inverted -76.4bp from -71.6bp late on Thursday.

Hopes of a deal to extend the debt limit in time to avoid an unprecedented default boosted equities, with the S&P 500 surging 1.25% higher by 1 p.m.
in New York while the VIX eased below the 18 level.

Brent gained 0.58% and WTI rallied 0.92%.

Copper vaulted 2.56% higher and gold edged up 0.18%.

By afternoon trade, EUR/USD was 0.05% lower, USD/JPY held onto gains of 0.38%, GBP/USD edged 0.19% higher and AUD/USD firmed 0.13%.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By eFXdata  —  May 26 - 01:30 PM

Bank of America (BofA) has reaffirmed its base case expectation that the Federal Reserve will not implement a rate hike in June, though the bank maintains an inclination towards a hike in the future, noting that it's a "close call".

According to BofA, three conditions need to be met for a Fed rate hike: 1) strong economic data, 2) an increase in the debt ceiling, and 3) subdued regional bank stress.

The bank also believes that inflation remains too persistent for the Fed to commit to a prolonged pause in rate increases. Even if the Fed decides to forego a rate increase in June, BofA suggests that it will keep the possibility of a July hike on the table.

BofA Global Research
By Justin Mcqueen  —  May 26 - 12:05 PM
  • GBP/USD hovers at weekly lows, despite better than f/c UK retail sales

  • Aggressively priced BoE hikes to limit downside for now 0#BOEWATCH

  • Yield support should offset stagflation fears as BoE becomes hawkish outlier

  • BoE hawk prefers to lean against inflation risks via additional rate hikes

  • Firm U.S. data has reduced yield advantage as Fed hikes come back into focus

  • Pivotal support at 100DMA (1.2289), break likely accelerates weakness

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By eFXdata  —  May 26 - 11:00 AM

ING Research has reacted to today's robust US personal income and spending report for April, noting that it could potentially lead to another Federal Reserve rate hike in either the June or July meetings. The report showed incomes rose by 0.4% month-on-month as expected, with wages and salaries increasing by 0.5%MoM. However, spending rose by 0.8%MoM, outperforming the 0.5% consensus, with March revised higher.

This surge in spending led to real consumer spending coming in at 0.5%MoM, beating the expected 0.3%. Given that consumer spending constitutes two-thirds of economic activity as measured by GDP, this is likely to prompt upward revisions of second-quarter GDP expectations.

On the inflation front, the core PCE deflator came in at 0.4%/4.7%, higher than the anticipated 0.3%/4.6%. This increase bolsters the argument of Fed hawks such as James Bullard and Neel Kashkari who advocate for tighter policy to ensure inflation returns to the 2% target in a timely manner. ING still anticipates a sharp slowdown in inflation in the second half of the year, but they are increasingly doubtful that the Fed will resist hiking rates, especially if spending continues to hold up.

ING added that if the debt ceiling issue is positively resolved and next Friday's jobs number comes in around 200k, the chances of a 25bp hike in June will increase.

ING Research/Market Commentary
By Christopher Romano  —  May 26 - 10:40 AM

EUR/USD fell Friday as U.S. rate SRAU3 and dollar gains helped to erase the overnight rally, and a further slide may be on the cards as U.S. data sows doubts about a pause in Fed hikes while expectations of more tightening increase.

Data suggests the probability of a U.S. recession will decrease while inflation may be rising again. April consumer spending and core PCE came in above estimates.

May University of Michigan consumer sentiment beat expectations but its 1-year and 5-year inflation expectation components fell from April's print.

The dollar rallied as investors lowered expectations for Fed rate cuts and increased the probability a hike will come in June Click here

The dollar's yield advantage over the euro increased.
U.S.-German 2-year yield spreads US2DE2=RR traded at their widest since March 21.

The upbeat U.S. data and yield spread influence is likely to keep EUR/USD bulls on defense.

Should a U.S. debt ceiling deal be reached U.S. rates may increase further, keeping bearish pressure on EUR/USD.

Technicals highlight downside risks.
A long upper wick has formed on Friday's candle, monthly RSI is falling and EUR/USD held below the 10-DMA and daily cloud.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By eFXdata  —  May 26 - 09:44 AM

Credit Agricole cites several factors for the continued weakness of the Japanese Yen (JPY): a persistently dovish Bank of Japan (BoJ), a robust Nikkei, a modest economic recovery in China focusing on services and consumption rather than investment, easing concerns about US regional banking, nonchalant investor attitudes towards US debt ceiling negotiations, and a US economy demonstrating resilience to Federal Reserve rate hikes.

Furthermore, the peak in the Fed Funds rate and the potential of the US economy falling into recession may put downward pressure on USD/JPY. While a resolution to the US debt ceiling is expected, the market has largely factored this in, thus the downside for the JPY from this source of weakness appears to be nearly exhausted. High US rates also risk causing further difficulties for US regional banks, which may bring back a safe-haven bid for the JPY.

However, Credit Agricole acknowledges its surprise at the JPY’s weakness during Q2. As a result, it has revised higher its USD/JPY forecasts, adjusting the end-Q2 forecast from 128 to 134, and the end-2023 forecast from 122 to 128.


Crédit Agricole Research/Market Commentary
By eFXdata  —  May 26 - 08:30 AM

Societe Generale has voiced its optimism about the British Pound's potential for growth, following this week's repricing of higher terminal rates by the Bank of England (BoE).

The bank suggests that a short EUR/GBP position may be the best expression of this perspective, underpinned by expanding rate differentials.

The possibility of the Eurozone's Consumer Price Index (CPI) moderating may also support this view, providing an additional boost to the GBP against the Euro.

Société Générale Research/Market Commentary
By Rob Howard  —  May 26 - 06:35 AM
  • Cable has traded a 51 pip range thus far Friday; 1.2317-1.2368

  • Those parameters are within Thursday's 1.2308-1.2387 range

  • 1.2308 was lowest level since April 3 (1.2275 was low that day)

  • UK retail sales up 0.5% MM in April vs 0.3% f/c; March revised down by 0.3%

  • U.S. April core PCE data due at 1230 GMT; 0.3% MM and 4.6% YY forecast

  • Biden, McCarthy looking to close US debt ceiling deal for two years

Refinitiv IFR Research/Market Commentary
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