This week, markets are in for a high level of uncertainty with sticky inflation concerns and an active earnings season.
For the week of April 24-28, major economic data releases and significant company earnings will most likely move the markets. Here’s what traders should look at each trading day.
Monday: Quiet Start with Potential for European Action
It starts the week slowly with a quiet session with New Zealand and Australia on bank holiday. The European markets may be a little busier than normal, however, with the German IFO Business Climate index, a keenly watched leading indicator of economic health, reported. Any reading below 90 should spark selling in the DAX, Germany’s benchmark stock index. The DAX has been in a steep uptrend since last October 2022 but is now showing bearish RSI divergence.
This would show that momentum is waning, and a correction of 5–6% could be in the cards, with the 100-day moving average as a potential target.
Tuesday: U.S. Consumer Confidence and Tech Earnings
Tuesday’s main event will be the Conference Board Consumer Confidence Index. This is a monthly report that provides valuable insight into consumer spending, one of the most significant drivers of economic growth. Q1 earnings reports from tech giants Microsoft and Alphabet (Google) will add to U.S. market volatility. The Nasdaq may show a strong reaction to these releases.
The index is currently forming a bullish flag pattern, and though valuations do appear stretched, a positive earnings surprise could push it toward the 13,600 level, filling a gap from prior trading sessions.
Wednesday: Australian Inflation and a Potential Breakout
Wednesday will be an active day for AUD/USD, as Australia’s CPI report is due for release. The RBA has indicated that inflation has peaked, but it still remains uncomfortably high at 6.8%. AUD/USD has consolidated of late, but recent moves in the pair do hint at a potential breakout.
The resistance at the 50-day moving average in the market could be a point of decision. A close lower below 0.6180 on the day may trigger a shift higher to lower trading range. Alternatively, it might also break to the upside if the reading of the inflation proves to be much stronger than expectations.
Thursday: US GDP data and shift in Gold’s momentum
Thursday will be headlined by the U.S. Q1 GDP report, where forecasts are mixed. While the prior two quarters topped forecasts by 0.3% each, data has begun to reflect deteriorating conditions. This could set the stage for a less-than-expected GDP growth reading. Gold is another asset to watch, as a strong uptrend is facing resistance from bearish RSI divergence.
This would mean that recent gold gains could lose steam for a pullback to the 2050 level. Any move below this zone would give an indication for further downside toward the 1900s.
Friday: Core PCE Price Index and the Potential Shift in the Yen
The highlight of Friday is the U.S. Core PCE Price Index, the Federal Reserve’s favorite inflation indicator. Headline inflation appears to have moderated, but core PCE remains elevated, showing that liquidity is still in the economy. Traders in USD/JPY should also watch this release, in combination with the Bank of Japan’s monetary policy statement.
The Swiss franc/ Japanese yen has managed quite a significant upward move- RSI divergence and any one-hour supply zone somewhat point to potential weakness that may be in store. IF the yen were to garner safe-haven flows, on account of a move through 147.5 upside in CHF/JPY could be considered to be on the cards amid the BoJ yield-curve control shift.
Conclusion
Expect a more volatile Week 17, considering the calendar is full of earnings releases, economic indicators, and possible sentiment shifters. Tech earnings will put the spotlight on Microsoft, Alphabet, Amazon, and Meta, driving the equity market more or less. Adding to this stress could be the Core PCE Price Index and the data for U.S. GDP, hence the requirement to trade carefully.
Takeaway Points for Traders:
- Watch for possible DAX correction if bearish divergence sustains.
- Watch NASDAQ for reaction from tech earnings, specifically, to post-earnings momentum.
- The bottom line is that the AUD/USD will either break out or down depending on the inflation data, and this will have significant implications for the Aussie dollar.
- Gold may see a shift in momentum, which could lead to a pullback.
- The Core PCE Price Index will likely dictate the Fed’s future policy stance and will thus be a key driver of the USD and broader markets.
- USD/JPY and CHF/JPY may be susceptible to safe-haven flows as well as BoJ policy statements.
Trade Smarter, Not Harder! The team at Forex Signals and HowToTrade.com is ready to take you through these events live. If you want to improve your trading skills, then these lessons in our academy will mean a lot to you. Follow our live streams and keep ahead of the markets.
