Eyes on Today’s PCE

*The market is lacking a catalyst; both the Dollar and Wall Street were calm in the recent session, and the market is eyeing today’s PCE reading.

*Loonies stayed firm after Monday’s snap election, and the Liberal Party remained the ruling party in Canada.

*Oil prices slipped as China’s manufacturing activities declined. 

Market Summary

Global financial markets remained subdued at the start of the week as investors await pivotal inflation data from the U.S. The dollar index hovered near the 99.00 level, reflecting muted sentiment, while Wall Street’s major benchmarks posted modest gains of less than 1%, signaling a loss of upward momentum.

Market focus now shifts to the release of the Fed’s preferred inflation gauge — the Core PCE Price Index — due later today. A softer-than-expected reading could reignite rate-cut expectations, potentially lifting risk assets while putting renewed pressure on the greenback. On top of that, Wall Street traders are also anticipating earnings reports from Microsoft and Meta Platform that could alter the direction of the indices, especially the tech-heavy Nasdaq. 

In Canada, the loonie found support following a snap election on Monday, with the ruling Liberal Party securing a victory. The result is viewed as a step toward political continuity and may help anchor investor confidence in the Canadian dollar.

Meanwhile, commodity markets showed mixed performance. Gold prices remained range bound between $3,275 and $3,345 for five consecutive sessions, reflecting indecision amid cautious risk sentiment. In contrast, oil prices slumped nearly 3% in the previous session, approaching the $60.00 threshold. Weak Chinese manufacturing data raised fresh concerns over demand, while persistent uncertainty around U.S.-China trade negotiations continued to weigh on the crude outlook.

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Current rate hike bets on 7th May Fed interest rate decision: 

0 bps (92.3%) VS -25 bps (7.7%)

Source: CME Fedwatch Tool

Market Movements

DOLLAR_INDX, H4

The Dollar Index extended its losses after disappointing U.S. economic data. CB Consumer Confidence fell to 86.0 (vs. 87.7 expected), and JOLTs Job Openings declined to 7.192M (vs. 7.490M expected). The downbeat data has raised concerns over the U.S. economic outlook, with markets now focused on this week’s key releases: Q1 2025 GDP, Core PCE, and Nonfarm Payrolls. Weakening indicators have fueled speculation of potential Fed easing, putting further pressure on the dollar.

The Dollar Index is trading lower following the prior retracement from the resistance level. However, MACD has illustrated increasing bullish momentum, while RSI is at 37, suggesting the index might experience technical correction since the RSI rebounded from oversold territory. 

Resistance level: 99.80, 101.95

Support level: 98.30, 96.35

XAU/USD, H4

Gold prices retreated as global risk appetite strengthened, reducing demand for safe-haven assets. Market sentiment improved after U.S. President Trump announced plans to ease 25% tariffs on automobiles and parts, offering temporary relief to automakers. Further optimism came from Commerce Secretary Howard Lutnick, who signaled that a major trade deal announcement is imminent, reinforcing expectations for a more stable trade environment.

Gold prices are trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 44, suggesting the commodity might extend its losses since the RSI stays below the midline. 

Resistance level:  3355.00, 3440.00

Support level: 3270.00, 3200.00

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GBP/USD，H4

GBP/USD remains supported after a strong April rally but is showing signs of fatigue as markets increasingly price in a BoE rate cut next week. The pair eased slightly after hitting a new multi-month high, as speculation of a 25 bps cut on May 8 gained traction. While dollar weakness—driven by soft U.S. data and falling yields—has helped lift the pound, recent BoE comments and global trade uncertainty have capped further upside. UK retail strength and wage growth continue to offer near-term support, but mixed PMIs and political risks from the May 2 local elections keep traders cautious. All eyes are now on today’s US PCE data and Friday’s NFP for fresh direction.

GBP/USD remains supported above the 1.2950 region but is showing signs of consolidation after its recent sharp rally. The RSI is 58 level after pulling back from earlier highs, indicating a potential pause in upward momentum. Meanwhile, the MACD is flat near the zero line with the histogram showing minimal divergence, suggesting a lack of clear directional bias and a possible period of sideways movement ahead. 

Resistance level:   1.3420, 1.3505

Support level: 1.3340, 1.3315

EUR/USD, H4

The EUR/USD pair is drifting lower, edging toward its long-term uptrend support level. A decisive break below this technical zone could mark a bearish shift in the pair’s broader trajectory. Despite a softer U.S. dollar in recent sessions, the euro has struggled to capitalize, highlighting underlying weakness in the single currency. Market participants are now turning their attention to upcoming eurozone GDP data and German employment figures, both of which could offer fresh direction and determine whether the euro can regain momentum or extend its decline.

The pair has been sideways after a plummet from its recent top at 1.1560. A break below its uptrend support level at near 1.1350 may be seen as a bearish signal for the pair. The RSI has been hovering near the 50 level, while the MACD is poised to break below from the zero line, suggesting that the bullish momentum has vanished. 

Resistance level: 1.1468, 1.1623

Support level: 1.1344, 1.1200

Nasdaq, H4: 

The Nasdaq continued its upward trajectory, breaking above the 19,450 resistance level and reinforcing a bullish outlook for the tech-heavy index. Investor sentiment was buoyed by positive signals from ongoing U.S.-China trade discussions, helping fuel the recent rally. Focus now shifts to upcoming earnings from Microsoft and Meta Platforms, set to report later today. Robust results from these tech giants could serve as a fresh catalyst, potentially propelling the Nasdaq to new highs.

Nasdaq broke above from the asymmetric triangle pattern and has broken its immediate resistance level, suggesting a bullish bias for the index. The RSI has broken above the 50 level while the MACD has broken above the zero line; both indicate that a bullish momentum is gaining. 

Resistance level: 20150.00, 21000.00

Support level: 18810.00, 18015.00

USD/JPY, H4: 

USD/JPY remains under sustained pressure, struggling to recover from recent lows amid a worsening macro backdrop. The yen has benefited from renewed safe-haven demand as trade tensions resurface, with proposed U.S. tariffs on Japanese goods weighing heavily on sentiment. At the same time, softer Japanese industrial data points to growing caution among manufacturers. Meanwhile, the dollar remains on the defensive as weak U.S. economic indicators and rising Fed rate cut expectations contrast with the Bank of Japan’s ongoing policy inaction, exposing the pair to further downside through policy divergence and carry-trade unwinds.

USD/JPY has stabilized after its recent decline, but upside momentum appears weak. The RSI is 48 and trending slightly upward while the MACD remains below the zero line, and although the gap between the MACD and signal line is narrowing, the histogram shows persistent bearish momentum. 

Resistance level: 143.95, 147.15

Support level: 140.45, 137.45

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Crude Oil, H4

Crude oil prices extended their losses, pressured by rising supply expectations and bearish inventory data. The American Petroleum Institute (API) reported a 3.76-million-barrel build in U.S. stockpiles — sharply above forecasts of 0.39 million. Adding to the pressure, OPEC+ confirmed that oil production accelerated for a second straight month in June. Meanwhile, ongoing progress in Iran-U.S. nuclear talks is raising the prospect of increased Iranian oil supply, further weighing on prices.

Oil prices are trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 28, suggesting the commodity might experience technical correction since the RSI entered the oversold territory. 

Resistance level: 61.50, 63.65

Support level: 59.65, 56.90