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Forex Market Outlook and Predictions

Gold Drops on FOMC Rate Hike Fears, Silver Outlook Uncertain

The world of precious metals took a tumble as gold prices fell lower, causing concern amidst speculation of a potential rate hike from FOMC. Meanwhile, silver price predictions kept investors on their toes as they continued to monitor the unpredictable market. With the release of the CPI report looming, markets were abuzz with anticipation as they attempted to absorb the latest Non-Farm Payrolls print – a crucial indicator of economic performance. All eyes were on the horizon, waiting eagerly to see what the future would hold.

Gold Price Outlook

Gold loses its shine as investors shift their bets towards a potential interest rate hike by the Federal Open Market Committee this May, after a strong US employment report last Friday. Adding to this, the US dollar gains strength against precious metals in the foreign exchange market.

However, despite a dip in prices on Monday, gold’s outlook remains positive in the long run.

Monday was a bit of a sad day for gold traders. Gold prices (XAU/USD) experienced a decrease of over 1%, making market players nervous that the precious metal would break below the significant $2,000 threshold. Why the drop? Well, it all boils down to a strong U.S. dollar and bold predictions of even more Fed tightening after the U.S. labor market report came out last Friday.

The report revealed that the U.S. added 236,000 jobs in March, which led traders to believe that the FOMC would increase interest rates another quarter-point come May. This outcome makes it less likely that the hiking cycle will take a break in the next few weeks.

As the central bank tightens up their policies, there may be some bad news for those who have invested in gold. With the U.S. currency expected to receive a boost, gold prices will be prevented from surpassing the $2,000 mark for the next few weeks. But don’t lose hope just yet – there’s still potential for the gold market to rebound.

When the economy takes a nosedive and aggressive monetary policies start to hurt, the Fed will probably go soft and loosen their stance. And when they do, experts think it might be time to invest in gold, because it could skyrocket in value faster than you can say, “Fed cut interest rates.”

Gold traders closely monitoring XAU/USD have reason to hold their breath as the current price hovers above a significant technical support level at $2,000. However, if sellers make a convincing case and the floor is broken, the price could plummet to $1,975 or even $1,940. 

Alternatively, bullish traders hoping for a rebound might keep their eyes on the $2,050 resistance level, which could spark buying interest and drive prices towards $2,075, gold’s all-time peak. Whatever happens next, the future of XAU/USD is certainly worth watching closely.

gold drops

Is There Hope With Silver?

Shimmering, lustrous, and undeniably valuable – could it be that the time has finally come for all eyes to turn to silver? As the world economy shifts and changes, many are beginning to wonder if this classic precious metal is about to steal the spotlight once again. 

With its versatility, durability, and undeniable allure, silver is poised to rise – but only time will tell if it truly has what it takes to shine brighter than ever before.

As the global economy remains uncertain, silver’s shine is only getting brighter. With gnawing anxieties over inflation and possible recession, this precious metal is proving itself to be a safe haven for investors worldwide. 

Surely, as these concerns persist into the upcoming quarter, silver could easily soar even higher and put pressure on its existing resistance.

Silver has been shining bright since mid-March, rallying around 17% from its March 10 swing low. It’s been smashing through moving averages left and right, which says a lot about its momentum. The trend so far has been upwards, with silver making higher highs and higher lows that will no doubt make any investor excited. 

The next target is a little over $24.50, with multi-month highs at $26.21 and $26.94 within reach. However, just like anything that rises too quickly, the CCI indicator is currently suggesting that silver is overbought, which means it might be time for a period of consolidation before it continues on its path to glory.

gold drops

It’s been a bit of a rough ride for silver lately, as the silver/gold ratio has been indicating underperformance since mid-December of last year. But there might be some light at the end of the tunnel, as the pair recently broke out of a downward channel and is now hovering near some key moving averages. 

If it manages to stay above these levels, there could be even more upside potential for the silver/gold spread. Of course, there is always the chance of a short-term pullback, especially since the pair is currently in overbought territory. Still, all this movement bodes well for anyone interested in precious metals trading.

gold drops

Silver is on the rise, and it’s not just a flash in the pan. Analysts predict that silver will not only continue to climb, but it will even outshine its glittering rival, gold. And we’re not talking about a short-term trend, either. 

The next three months could be a real silver lining for savvy investors. While some might see warning signs in the charts, the overall outlook for silver is undeniably positive. So if you’re looking for a precious metal to add to your portfolio, don’t overlook this brilliant option.

Currencies Updates After NFP Report

The US Dollar continues to flex its currency muscles, bolstering its position against global counterparts on Monday. Fueling this aggressive climb was encouraging news from Friday. 

The US non-farm payroll report boasted substantial gains, paving the way for the greenback to show off its might. While the stock market was taking the day off for Good Friday, the currency market was gearing up for a surge. Now, with liquidity restored, the US Dollar has stormed back with renewed vigor.

March saw a boost in employment with 236k new jobs added, beating the expected 230k. However, this was a slight dip from February’s impressive 326k. The real surprise came in the form of an unexpected dip in the unemployment rate, which fell to 3.5% from the predicted 3.6%. 

Even more impressive was the fact that the labor force participation rate increased, indicating that the economy was able to successfully integrate new workers without compromising on unemployment.

The Key Takeaways? 25-bps Hike Prediction

The job report spells out a likely 25-point rate hike by the Federal Reserve, causing Treasury yields to soar. But Wall Street stubbornly holds its ground, finishing off with flying colors as the Dow Jones and S&P 500 climb up higher. As for the technology-savvy Nasdaq Composite, it remains comfortably unchanged.

As Asia-Pacific traders gear up for Tuesday’s market action, all eyes are on China’s March inflation numbers. With the country bouncing back from its successful Covid-zero campaign, savvy investors are eager to see if the figures point to any potential price surges, which could signal a booming economy.

Dollar Updates and Analysis

The DXY Dollar Index has been showing some promising signs as the greenback aims to climb higher. Despite facing some challenges near the 100-day Simple Moving Average, which has acted as a barrier in the past, the support zone of 101 – 101.29 has provided some stability. If the dollar manages to break through the resistance, there could be notable gains in store.

However, caution is still needed as the SMA may continue to act as a hurdle, casting a shadow on the potential upside.

DXY Dollar Index

Dollar-Yen Bulls Predictions

Currency traders are predicting big gains for USD/JPY bulls, with a projected target of 135. The driving force behind this boost is a divergence in monetary policies between the two countries. Analysts are watching with bated breath to see how this dynamic will play out in the coming months, and whether this bullish momentum will continue to gain traction. 

If you’re interested in investing in foreign currency, now is the time to take a closer look at USD/JPY and explore your options for maximizing your returns.

USD/JPY traders won’t be facing any major economic data today, but that doesn’t mean it’s a dull day. With China inflation and central banks in the mix, there’s plenty ahead for forex enthusiasts!

Following a positive shift in the sentiment of the Federal Reserve’s monetary policy, Monday saw an encouraging return to 133 on the charts, thanks in part to a promising US Jobs Report. On top of that, Bank of Japan Governor Ueda’s commitment to maintaining an ultraloose monetary policy highlights a continuing divergence in policies that bodes well for the US dollar.

Despite a range-bound start to the day, the USD/JPY slipped to an early low of 133.494 before bouncing back up to a high of 133.624. However, by the end of the morning, the currency pair was down 0.03% at 133.543. What will the rest of the day hold for this dynamic duo? Only time will tell.

USD/JPY 110423 Daily Chart

To avoid a possible slump, the USD/JPY needs to stay above the 133.096 pivot and aim for the First Major Resistance Level at 134.360. A positive sign would be a move above the Monday high of 133.870, but it all depends on how the Fed talks about the USD/JPY.

If the rally continues, the bulls may go for the Second Major Resistance Level at 135.135, with the ultimate goal being the Third Major Resistance Level at 137.174. Will the USD/JPY make the leap? 

It’s a nail-biting moment: a plummet through the pivot could trigger a slide towards the First Major Support Level (S1) at 132.321. Fortunately, analysts believe the pair is unlikely to dip below the critical sub-132 level, which would trigger the Second Major Support Level (S2) at 131.057.

Even if the worst happens, and there is a sharp downturn, all is not lost. The yawning mouth of the Third Major Support Level (S3) at 129.018 is always there as a safety net. Keep your eyes peeled, and your fingers crossed – this could be a defining moment for the USD/JPY pair.

Looking Ahead

Get ready for a jam-packed week of economic events. Keep a sharp lookout for the US CPI Report and Canada’s BOC Rate Statement, along with various G20 Meetings and the Bank of England Governor’s anticipated statement.

Brace yourself for the US PMI and Unemployment Claims reports on Thursday, leading up to the grand finale of the US Retail Sales report. Don’t get left behind; stay in the loop with Traderfactor’s Economic Calendar.

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  • Zahari Rangelov

    Zahari Rangelov is an experienced professional Forex trader and trading mentor with knowledge in technical and fundamental analysis, medium-term trading strategies, risk management and diversification. He has been involved in the foreign exchange markets since 2005, when he opened his first live account in 2007. Currently, Zahari is the Head of Sales & Business Development at TraderFactor's London branch. He provides lectures during webinars and seminars for traders on topics such as; Psychology of market participants’ moods, Investments & speculation with different financial instruments and Automated Expert Advisors & signal providers. Zahari’s success lies in his application of research-backed techniques and practices that have helped him become a successful forex trader, a mentor to many traders, and a respected authority figure within the trading community.