Fundamental Analysis & Market Sentiment

I wrote on 19th April that the best trades for the week would be:

1. Long of the USD/JPY currency pair following a daily (New York) close above ¥160. This did not set up.

   

2. Long of Brent Crude Futures if we get a daily close above $112.50. This also did not set up.

Neither of these trades set up.

A summary of last week’s most important data in the market:

1. US Retail Sales – the month-on-month increase was higher than expected, at 1.7% not 1.4%. This suggests a more buoyant US economy which would tend to be a hawkish pull on the Fed, boosting the USD.

2. UK CPI (inflation) – an annualized rate of 3.3% as expected.

3. Canada CPI (inflation) – lower than expected, with a month-on-month increase of only 0.9% when 1.1% was widely forecasted. This is a dovish tilt for the Bank of Canada, which would tend to weaken the CAD.

   

4. New Zealand CPI (inflation) – slightly higher than expected, with a month-on-month increase of 0.9% while 0.8% was forecasted. This is perhaps a marginally hawkish tilt for the RBNX.

5. Germany & UK Flash Services & Manufacturing PMI

6. UK Retail Sales – UK was above expectations; Germany was below expectations.

7. UK Claimant Count Change (Unemployment Claims) – marginally worse than expected.

For yet another week, last week’s economic data releases were much less influential upon the markets than the ongoing US/Iran negotiations. Optimism that the war will come to a full end soon with some kind of deal and an open Strait of Hormuz continued to increase, and this sent stock markets rising modestly, especially in the USA. The S&P 500 Index has risen by over 13% within just the past three weeks after reaching a new 7-month low. It closed Friday at a new record high! This is a huge turnaround, and April is on track to being the best month for the S&P 500 Index in 52 years.

However, after markets closed Friday, the mood will have soured considerably, after the Iranian ambassador left prepared talks in Islamabad and the USA never sent a delegation. Towards the end of Saturday, President Trump said he wasn’t going to waste time trying to set up a meeting, and that if the Iranians wanted to talk, they should call him, because he “held all the cards”. Trump claimed the Iranians’ proposed deal was poor, but was then followed by a much better offer, which was still unacceptable to him. Prediction markets open over the weekend reacted by showing a much lower chance of a peace deal before the end of June.

Trump will continue the blockade, which is estimated to be costing Iran about $400 – $500 million per day. It may be that the USA will launch fresh attacks – US military tankers have been observed building up at Israeli airports, just as was so before the initial hostilities erupted at the end of February.

Another issue that is increasingly being talked about is the delayed impact of the closure of the Strait of Hormuz and the resulting forced shutdown of many of Iran’s oil wells. Some analysts see demand for crude oil lowering on the higher prices which are forcing a decrease in consumption, with businesses scaling back.

The Week Ahead: 27th April – 1st May

The outcome of negotiations and the ceasefire concerning the Middle East war is likely to remain very influential on the market over the coming week, but there are several scheduled items, including major central bank policy meetings, which could have a big impact.

The coming week’s most important data points, in order of likely importance, are:

1. US Federal Funds Rate and FOMC Statement

2. US Core PCE Price Index

3. US Advance GDP

4. US Employment Cost Index

5. Bank of Japan Policy Rate, Monetary Policy Report, and Outlook Report.

6. European Central Bank Main Refinancing Rate and Monetary Policy Statement Australia CPI (inflation)

7. Bank of England Official Bank Rate & Votes, Monetary Policy Summary & Report

8. Bank of Canada Overnight Rate, Policy Report, and Rate Statement

9. Australia CPI (inflation)

10. Canadian GDP

Monday is a public holiday in Australia.

Wednesday is a public holiday in Japan.

Friday is a public holiday in China, Switzerland, France, Germany, and Italy.

Monthly Forecast April 2026

Currency Price Changes and Interest Rates

For the month of April, I forecasted that the USD/JPY currency pair would rise in value. The performance of the forecast so far:

Weekly Forecast 27th April 2026

Last week, I made no weekly forecasts as there were no unusual movements in the Forex market last week.

Volatility last week was relatively low, with only 3% of currency pairs moving by more than 1% in value. Next week’s volatility is likely to increase substantially, with several major central bank policy meetings (including the Federal Reserve) scheduled, and some important GDP and inflation data too.

You can trade these forecasts in a real or demo Forex brokerage account.

Technical Analysis

Key Support/Resistance Levels for Popular Pairs

Key Support and Resistance Levels

US Dollar Index

The US Dollar printed an indecisive inside bar which was also a doji candlestick. It had a small range. We have a mixed long-term trend, with the 3-month trend bullish and the 6-month trend bearish.

The greenback is clearly within a long-term consolidation phase, so we cannot really expect much of a trend in the US Dollar here.

I think the greenback will be more driven by the progress in the current Middle East ceasefire talks – if war breaks out again, it will likely boost the Dollar, not so much as a haven but more as an effect of the inflationary shock of the rising energy prices. If we start to see progress on a real long-term deal, conversely, it will probably be bearish for the US Dollar. Markets were optimistic about a deal last week, but the events of this weekend and the seeming absence of talks will, as things stand, generate a more risk-off market environment as the new week gets underway.

US Dollar Index Weekly Price Chart

USD/JPY

The USD/JPY currency pair gained a little ground last week, four weeks after finally making the long-anticipated bullish breakout beyond the big round number at ¥160. However, the price is showing no inclination to go anywhere yet. The problem is not Yen weakness, which can be taken for granted over the long-term it seems. The problem for progress higher by this currency pair is the weakness in the US Dollar now that there is a ceasefire seen as leading to a peace deal in the Middle East war, because if there is a longer-term agreement it will remove some inflationary pressure from the Fed through lower energy prices. Even if the Dollar does strengthen on risk-off sentiment, the Yen might firm up too for the same reason.

Trend traders will be worrying about the slight bearish bias we are seeing near the highs and the price’s unwillingness to break out, especially above the ¥160 level. The Bank of Japan might get nervous and work for an intervention to strengthen the Yen above that level, adding a potential extra hurdle for bulls.

Bulls might however be encouraged by the solid support at the lows below ¥158.50. There is also a very solid trend line which has been supporting the price action for a year.

I remain long here, but more cautious traders might want to wait for a daily (New York) close above ¥160 before entering a new long trade.

USD/JPY Weekly Price Chart

S&P 500 Index

The S&P 500 Index has been on a wild ride over the past few weeks, rising by more than 13% in value within that time. If this holds up, it will be the biggest calendar month gain by the Index since 1987, or possibly even 1974. This is quite an extraordinary turnaround after the price fell by about 10% to spend several days trading below the 200-day simple moving average and reaching new 7-month low prices. This is extraordinarily high volatility and an unusual event.

Although last week’s gain was not so large, the price ended the week right on the high of its range in blue sky, which is a bullish sign as it makes a new record high.

Stock markets are soaring through the same driver that was sending them plummeting just a few weeks ago – the war between the USA and Iran. The ceasefire and negotiations have generated an increasingly strong expectation that the war will end soon with a comprehensive peace deal. This sent markets higher, but there is a strong chance of this Index gapping down when markets open Monday due to the more pessimistic developments concerning the prospect of a USA/Iran deal.

I think it will be wise to wait on the sidelines and see what the market does on Monday. If we get a daily close at the end of Monday that is higher than Friday’s closing price, a new long trade entry will look extremely tempting.

S&P 500 Index Weekly Price Chart

NASDAQ 100 Index

Everything I wrote above about the S&P 500 Index applies equally to the NASDAQ 100 Index, with the small adjustment that the bullish breakout to new record highs here looks even stronger. As the NASDAQ 100 averages a higher return than the S&P 500 Index, so if you want to be long there, you should seriously consider being long here too.

NASDAQ 100 Index Weekly Price Chart

Brent Crude Oil Futures

Brent Crude Oil rose slightly last week, with the continued closure of the Strait of Hormuz by Iran driving the price a little higher.

This continuation of the closure situation might push the price up a bit, but it is unlikely to send prices to new highs. I am not sure that the price will fall a great deal further even if there is a peace deal, it may take a while to do that, but it should continue to trade lower in that scenario.

The surprise to consider is, what if renewed kinetic war breaks out now talks have failed twice and Iran has said it no longer considers itself bound by the ceasefire. If this happened, it would certainly send the price of oil racing higher, we might even see the price rise by $20 in a single day.

I think that unless you have a strong view on whether a resumption of the war is likely, there is no point trading crude oil right now, but on a surprise resumption of the war, a long trade could be a good idea.

I will go long here if we get a daily (New York) close above $112.50 per barrel.

If you do go long, Brent will likely be the better vehicle than WTI, as it is more exposed to events in the Strait of Hormuz.

Brent Crude Oil Futures Weekly Price Chart

Gasoline Futures

RBOB Gasoline Futures rose strongly last week, with the continued closure of the Strait of Hormuz by Iran driving the price higher.

This continuation of the closure situation might push the price up a bit, but it is unlikely to send prices to new highs. We will likely see the price continue to trade higher as the new week opens as face-to-face peace talks fail again and President Trump apparently rejects two Iranian offers. Unless there is a dramatically different development, this looks like a buy right away. If kinetic war breaks out, which is possible if unlikely, the price will probably rise even more strongly.

I am not sure that the price will fall a great deal further even if there is a peace deal, it may take a while to do that, but it should trade lower in that scenario.

Gasoline is leading and rising ahead of crude oil, making it a more attractive buy right now. The only thing bulls should be watching out for are high volatility, and the fact that the price is just under the absolute recent high but has not quite broken above it.

Gasoline futures are too large for most retail traders, so using a CFD or an ETF like UGA could be a more accessible way to get exposure.

Gasoline Futures Weekly Price Chart

Bottom Line

I see the best trades this week as:

1. Long of the USD/JPY currency pair following a daily (New York) close above ¥160.

2. Long of Brent Crude Futures if we get a daily close above $112.50. This is extremely unlikely to set up unless there is a surprise resumption of the war.

3. Long of the S&P 500 Index following a daily close above 7,165.

4. Long of the NASDAQ 500 Index following a daily close above 27,303.