Technical Tuesday

FTSE 100 forecast mildly optimistic following trade truce-led rally; UK equities lifted by global risk sentiment as benchmark stock index tries to break out of short-term consolidation pattern.

Traders were too busy reversing the “Sell America” narrative to pay attention to weak US data today. Buoyed by renewed optimism around potential trade deals between the US and major partners, the dollar has made a small recovery in recent days. While it is too soon to declare and end to the existing bearish dollar forecast, could this be the early stages of a broader dollar rebound?

In this edition of Technical Tuesday, I will provide gold technical analysis and look at various time frames to highlight how the metal has become significantly overbought with prices continuing to trade near record highs that have been created repeatedly in recent months. Still, unless we observe a clear reversal pattern, any technical indications of overheating prices should be taken with a pinch of salt.

After a bright start, the S&P 500 and Nasdaq 100 were coming off their highs, while the Dow and Russell lost their earlier gains. The loss of momentum comes after the S&P enjoyed one of its strongest days so far this year in the previous session. Clearly, investors are fearful about further volatility ahead and are happy to book profit, as the major indices test key resistance areas.

The confusion regarding tariffs means the near-term EUR/USD outlook remains murky, but we maintain a bullish view on the pair in light of Germany’s historic fiscal shift approved last week and the recent mixed US data.

Welcome to another edition of Technical Tuesday, a weekly report where we highlight some of the most interesting markets that will hopefully appease technical analysts and traders alike. In this edition, we will get technical on the Nasdaq 100.

US index futures came off their earlier lows as European markets bounced back to trade higher across the board, with the major indices here showing gains of 0.5 to 1.3 percent by midday in London.

In this shortened version of Technical Tuesday, we will focus on the AUD/USD pair following the Reserve Bank of Australia’s first rate cut since November 2020 overnight and the US dollar’s recent bearish price action. We maintain a modestly bullish AUD/USD forecast, despite the pair weakening a touch today.

FX pairs like the EUR/CAD may ease back further following yesterday’ decision by Trump to delay the tariffs on Canada. That decision means the near-term Canadian dollar forecast is no longer bearish, making the EUR/CAD an ideal pair to look for bearish setups on for CAD bulls. Meanwhile, USD/CAD is beginning to look rather interesting.

Investors are still cautious despite reports that Trump will be considering a more gradual ramp-up in trade tariffs in order to avert inflation spikes. So, more price action is needed to confirm a low has been hit, as this could just turn out to be an oversold recovery – especially given the recent bearish price action across several US indices. Thus, it is too early to turn positive again on the Nasdaq 100 outlook.

We think that the EUR/USD outlook leans modestly bearish, especially after Monday’s market optimism—fuelled by potential stimulus in China—provided a short-lived relief for risk assets. , ahead of US CPI and ECB rate decision, and the Fed's own rate decision in the following week.