Most Read: The US Dollar’s Path Related to the US Jobs Report, Settings on EUR/USD, USD/JPY, GBP/USD
Last week, volatility rose sharply across many assets, causing significant breakouts and collapses. First, U.S. Treasury yields plunged across the board, with the 2-year yield falling below its 200-day simple moving average to hit 4.54%, its lowest level since early June.
Falling U.S. bond yields coupled with bullish sentiment on Wall Street gave stocks a boost, pushing the Dow Jones 30 above its July peak and near its all-time high. The Nasdaq 100 also gained but failed to clear overhead resistance at 16,100.
The market momentum also benefited precious metals, triggering a strong rally in many of them. The spot price of gold, for example, rose 3.5% and was within striking distance of surpassing its record high of $2,075. Silver, meanwhile, rose 4.7% to close at its best level since May.
In FX, USD/JPY fell 1.77% this week to break below its 100-day simple moving average – a bearish technical signal that could point to further losses for the pair. Meanwhile, EUR/USD remained broadly unchanged, with lower-than-expected inflation in the Eurozone reducing the single currency’s appeal.
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Looking ahead, US yields are likely to face further downward pressure as interest rate expectations in the US shift further downward, setting the stage for a weaker dollar. Against this backdrop, risk assets and precious metals could remain supported well into 2024.
Upcoming US data, including the ISM Services Purchasing Managers’ Index and Non-Farm Payrolls (NFP), will give us an opportunity to better assess the Fed’s monetary policy outlook. Weak economic data could reinforce dovish expectations, while strong numbers could lead to abandoning rate cut bets. The latter scenario could lead to a reversal of recent trends in major assets.
For a deeper insight into the catalysts that could guide financial markets and drive volatility in the coming trading sessions, explore DailyFX’s curated forecasts for the week ahead.
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UPCOMING US ECONOMIC DATA
Source: DailyFX Economic Calendar
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BASIC AND TECHNICAL FORECAST
British Pound Weekly Forecast: US Interest Rate Forecasts to Drive, Uptrend at Risk
The British pound has risen steadily against the U.S. dollar since late September, but most of the recovery has been a story of dollar weakness rather than a vote of confidence in sterling.
Japanese Yen Weekly Forecast: The Yen remains at the mercy of external factors
The Japanese yen has gained significantly against the euro and the greenback over the past week. The move was largely driven by Euro and USD fundamentals and I expect that to continue.
Weekly Oil Forecast: Crude Oil Markets Unhappy With OPEC+
Crude oil prices plunged last week after OPEC+ announced voluntary cuts through 2024, as US factors play a major role in the near-term forecast this week.
Euro (EUR) Forecast: EUR/USD, EUR/GBP collapse as rate cut talk grows louder
The euro has seen a sell-off against a number of other currencies this week as expectations of a rate cut by the ECB grow and bond yields fall.
Weekly Gold Forecast: XAU aims for NFP after Powell
Gold prices recovered to close the week well above the $2,000 level, while XAU/USD moves into the overbought zone.
The trend of the US dollar depends on the US jobs data and the settings for EUR/USD, USD/JPY and GBP/USD
This article focuses on the technical outlook for major US dollar pairs such as EUR/USD, USD/JPY and GBP/USD. The article also examines key price levels that could come into play ahead of the US jobs report for November.
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