The Fed left interest rates unchanged as expected with basically no change to the statement. The Dot Plot still showed three rate cuts for 2024 and the economic projections were upgraded with growth and inflation higher and the unemployment rate lower.Fed Chair Powell maintained a neutral stance as he said that it was premature to react to the recent inflation data given possible bumps on the way to their 2% target. The US CPI and the US PPI beat expectations for the second consecutive month.The US Jobless Claims beat expectations across the board.The latest US Manufacturing PMI beat expectations while the Services PMI missed slightly. Both the measures remain in expansion though. The market expects the first rate cut in June.

GBPThe BoE left interest rates unchanged as expected but with Haskel and Mann this time voting for a hold instead of a hike. The employment report missed expectations with an uptick in the unemployment rate and an easing in wage growth.The UK CPI missed expectations across the board but with Services inflation remaining sticky, which continues to support the BoE’s patient stance.The latest UK PMIs showed the Services PMI missing expectations slightly and the Manufacturing PMI beating. The market expects the first rate cut in June.

GBPUSD Technical Analysis – Daily Timeframe

On the daily chart, we can see that GBPUSD spiked back to the upper bound of the range following the Fed decision but eventually erased all the gains as the sellers piled in with a defined risk above the resistance to position for a drop back into the 1.2612 support. The buyers, on the other hand, will likely step in around the support to position for a rally back into the resistance targeting a breakout.

GBPUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price broke through the support zone around the 1.27 handle following the more dovish change in the voting split in the BoE rate decision and the stronger US data. The pair should now reach the 1.2612 support where we will likely get some reaction as the buyers will want to buy the dip to position for a rally all the way back to the resistance. If the price were to break below the support though, we can expect the sellers to increase the bearish bets into the 1.25 handle.

GBPUSD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that in case we get a pullback from these levels, the sellers will have a better risk to reward setup around the 1.27 handle where we can find also the confluence with the 38.2% Fibonacci retracement level and the red 21 moving average. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and increase the bullish bets into the 1.28 resistance.

Upcoming Events

Today we conclude the week with the UK Retail Sales data.

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Gold Retreats Slightly Amidst Rally, Fed Rate Cut Speculations

Gold’s rally briefly paused on Thursday, as spot gold dropped 0.3% to $2,180.49 after reaching a record high of $2,222.39. U.S. gold futures, however, climbed 1.1% to settle at $2,184.7. The slight pullback was influenced by a strengthening dollar and market corrections after aggressive buying. Despite this, the overall sentiment in the gold market remains bullish, fueled by anticipation of Federal Reserve’s hinted interest rate cuts in 2024 and strong central bank buying.

Oil Prices Slip Amid Gaza Ceasefire Hopes and Strong Dollar

Oil prices declined on Friday due to potential easing of Middle East tensions with a nearing Gaza ceasefire and a robust U.S. dollar, coupled with decreasing U.S. gasoline demand. Brent crude and U.S. crude futures both fell by 0.6%. The ceasefire prospect, which could stabilize regional tensions and ease crude transit, and a strong dollar, making oil costlier for foreign buyers, are key pressures. Meanwhile, U.S. gasoline demand dip indicates a potential slowdown in crude consumption.

U.S. Dollar Climbs for Second Consecutive Week Amid Global Rate Divergence

The U.S. dollar is poised for its second week of broad gains, spurred by global interest rate disparities and weaker foreign currencies. A surprising rate cut in Switzerland and steady rates by the Federal Reserve contrast sharply with other central banks, bolstering the dollar. This strength is highlighted by the yen’s drop despite Japan’s rate hike and the yuan’s fall to a four-month low, prompting intervention. The dollar’s rise is impacting various currencies, with the euro, Australian, and New Zealand dollars all falling.

In a notable development, Anatoly Yakovenko, cofounder of Solana, recently expressed support for Ethereum amid escalating regulatory scrutiny. His statement, shared on social media, comes at a crucial juncture as the SEC intensifies its investigation into Ethereum’s potential classification as a security.

The focus of the SEC’s inquiry centers on Ethereum’s shift to a “proof-of-stake” governance model, which has raised concerns about its regulatory status. This scrutiny has implications not only for Ethereum but also for the approval of an Ethereum ETF and the oversight of Ethereum futures markets by the CFTC.

Yakovenko’s public alignment with Ethereum, in opposition to potential regulatory actions, carries notable implications for the broader cryptocurrency landscape. It underscores the interconnectedness of various projects and highlights the regulatory challenges facing the industry as a whole.

Common space

This bold stance against the state’s potential classification of Ethereum as a security echoes sentiment from a previous time, reminiscent of Vitalik Buterin’s words during its tumultuous period in 2023. Indeed, Yakovenko’s words harken back to Buterin’s show of support for Solana during its struggles following the collapse of FTX and the broader crypto market downturn.

At the moment, experts estimate the probability of Ethereum ETF approval this spring at no more than 30%. However, with the latest regulatory developments, these odds could have already changed. How will the saga with Ethereum and its status turn out in the end, and will the market see an ETF for the largest altcoin? This is probably one of the most interesting questions right now.

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