This article was written by Exness.
The FED’s week in the market is over, and we can sum up key developments, which might shape upcoming trends. The interest rate decision in the US was kept at the same level, promoting the “wait and see” narrative and the upcoming “long pause” for the interest rate in the major world’s economy. The European Central Bank, as well as the Bank of Canada have declined interest rates for quarter a point, pressuring EUR and CAD respectively against the Greenback.
Probabilities for “keeping pause” for upcoming meetings in May for the FED have increased to 55%, dashing hopes for a quick interest rate drop. Yields of 30-year bonds of Canada have dropped to 3.2%, discounting more upcoming rate declines
The PCE index, also known as “FED’s inflation”, had matched expectations and rose to 0.2% from the previous drop in December, cementing expectations about the interest rates.
Stock markets have trimmed a shocking correction triggered by Deepseek AI platform release, but NVDA and other chipmakers have had a rough week and haven’t recovered losses yet. Overall market sentiment is rather positive as the rotation mechanism from big techs to other names evolves.
Commodity markets have been quiet, in spite of Gold establishing the new all-time high, as flight-to-safety narrative dominates in the market. Political agenda remains to be in focus and keeps investors aware of more volatility coming in.
CADJPY
The Canadian dollar is losing ground to Japanese Yen, as differences between monetary policy expectations between respective currencies start to deviate. A steady performance of yields of 30-year bonds of Japan (displaying a 2.2% yield) and reluctance of market participants to a belief of a potential rate hike in Japan, may lead to a further drop of CADJPY.
Technically, the instrument is located below a value area – a combination of 20 and 50 moving averages, and has established the new swing low this week. In case of continuation of a bullish pullback, the next resistance area is located at 107.50 zone: should this zone be rejected, the price may dive deeper as shown at the chart below.
S&P500 (US500)
After a turbulent week, S&P 500 is recovering, displaying resilience and improving risk appetite. Both market strength and breadth are improving, and in spite of tech stocks having taken a hit, financial and communication sectors lead the rally.
With new earnings week coming in, S&P 500 is on the rising track with an open road to achieving 6200 zone: the borderline of Bollinger Bands indicator with a parameter of 20.
Political narratives play on the side of growth, though create additional concerns, but the market seems to be more focusing on growth.
