Nasdaq, Dow Jones, US Dollar, Euro, Crude Oil, Bitcoin, Inflation

Market sentiment deteriorated last week amid cleared Easter holiday trading. US stock markets were hit hard, pushing the Nasdaq-100 Index (NDX) and the Dow Jones Industrial Average (DJIA) deep into the red for the second week of losses. Treasury traders pressed the sell button over the weekend in New York, pushing yields higher, especially at the long end of the curve. This has seen the 10Y/2Y curve steepen further from its recent reversal. In fashion with Wall Street’s risky tone, Bitcoin prices fell for a second week, with BTC/USD falling below the much-hyped 40,000 mark.

A steepening of the curve is seen as a positive sign for the economy at first glance. However, this movement on the long end of the curve here suggests an accentuation of the decline, which, as the name suggests, is a concern for the markets. Priya Misra, global head of rate strategy at TD Securities, said Thursday that “this is going to tighten financial conditions, it’s going to impact the consumer, and it’s actually going to keep the Fed from climbing way above the neutrality”. Somewhere else, global central banks appear to be forging ahead with policy tightening, perhaps inspired by the Federal Reserve.

These conditions, if allowed to persist, could threaten the Fed’s ability to continue to tighten policy later this year. If so, this could inhibit the US Dollar in the coming months. The DXY US dollar index gained about 0.5% through Thursday’s closing bell. This was likely due to safe-haven inflows as well as an uptick in Fed rate hike bets after last week’s searing US CPI report. The Euro fell victim to greenback strength, with EUR/USD extending its post-ECB selloff into the weekend. In Australia, another monthly jobs gain was not enough to help the Aussie dollar.

Speaking of inflation, this week offers several impressions of inflation from the G7 economies. The final reading of Eurozone inflation in March is expected, with the core figure expected to remain unchanged at 3.0%. Canada’s Consumer Price Index (CPI) for March will also cross the wires. Analysts’ CPI is expected to rise 6.2% year on year, from 5.7% in February. USD/CAD rose last week despite rising oil prices. The bullish scenario for oil prices could fade the back of rising inventory levels in the United States.

Europe is mulling a ban on Russian oil exports, with reports indicating that European lawmakers favor a phased approach to eliminating the bloc of Russian energy products. New Zealand inflation in the first quarter will follow, with the Bloomberg consensus estimate of 7.1% y/y. the The New Zealand dollar fell against the US dollar last week despite a surprise rate hike of 50 basis points from the RBNZ. Japan will end the week with its March CPI report.

WEEKLY PERFORMANCE OF THE US DOLLAR AGAINST CURRENCIES AND GOLD

Fundamental forecasts:

Aussie Dollar Outlook: AUD Undermined by USD as Fed Hikes All Prices

The Australian dollar has strong fundamentals, but a hawkish Fed has favored the US dollar so far. New data is still a long way off, what will boost AUD/USD?

Gold Price Forecast: XAU/USD Will Fall Along With Inflation Expectations

Gold bulls got to work last week, sending bullion prices up around 1.5% after a scorching US CPI report. However, sellers may soon step in due to lower inflation expectations and increasingly hawkish central banks.

Euro Outlook Weakens Further, Support Levels Collapse

The combination of a strong US Dollar and a Euro under pressure leaves EUR/USD sitting on a two-year support level that looks increasingly fragile.

British Pound (GBP) Forecast: Cable on the Back Foot as Easter Approaches

GBP/USD appears to be entering the red over the Easter weekend after a strong comeback on Wednesday. The pound is in for a quiet week next week with a focus on the United States.

US dollar forecast: Fed Chairman Powell to speak at IMF meeting

Developments coming out of the IMF’s 2022 Spring Meeting could sway the US Dollar, with President Jerome Powell set to speak at the event.

Technical forecasts:

Gold Weekly Tech Forecast: XAU/USD at Decision Point

Gold has had a strong run this week, with the weekly close likely to shape its future trajectory. The depth of Thursday’s pullback could pose a threat to the bullish outlook

S&P 500, Nasdaq 100, Dow Jones Predictions for the week ahead

Stocks are trading weak right now and may continue to do so as a new week begins.

US Dollar Technical Forecast: DXY Stretches to New Yearly High

The US Dollar hit new yearly highs this week, with DXY attempting to stabilize above 100 in the second weekly advance. The technical levels that matter on the weekly chart.

Crude Oil Technical Forecast: Oil bulls don’t seem to be over yet

The bulls have come back strong this week in crude oil, and they may not be over yet.

Canadian Dollar Technical Outlook for the Week Ahead: USD/CAD Rebound Faces Next Test

The Canadian dollar saw a mixed outlook on a major-based index. USD/CAD’s next move may depend on its performance around a key trend line. What are the key levels to watch next week?

— Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the comments section below or @FxWestwater on Twitter

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