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GBPUSD: 4HR Death Cross, LH and LL formation downtrendMaintaining my shorts on this pair with validation coming from the 50EMA (turquoise) crossing the 100EMA (white) which forms a death cross in the 4hr time frame. GBPUSD has failed to make a new higher high and so I'm expecting a push down to the recent low, we may break this immediately, or retrace back to the descending trendline that's now formed. We're making lower highs and lower lows which indicates a down-trend. Ultimately I'm expecting this pair to fall to below 1.22 in the coming weeks. Big FOMC release tomorrow, if the notes support Powell's recent hawkish stance then this will be bad for cable, then there is NFP on Friday which is a bit unknown. Fundamentally for GBP, recent data suggests inflation may be coming down, which suggests that the BoE may become less hawkish. Powell suggested a couple more hikes, which could mean Fed interest rates remain higher for longer. I'm also expecting a push up for DXY based on it's chart patterns. I'm staying short.
Short
by Finchcliffe
14
EUR/USD eyes eurozone and German services PMIsEUR/USD is drifting downward on Tuesday. In the North American session, the euro is trading at 1.0898, down 0.15%. The US markets are closed for the July Fourth holiday, and we can expect limited movement from EUR/USD for the remainder of the day. After disappointing German and eurozone Manufacturing PMIs on Monday, it's the turn of Services PMIs on Wednesday.  Although the Service PMIs are expected to weaken, both are expected to point to expansion, with readings above the 50.0 level. The eurozone PMI is expected to dip to 52.4, down from 55.1, while the German PMI is projected to slow from 57.2 to 54.1. The euro didn't show much of a reaction to the Manufacturing PMIs, as the prolonged decline in manufacturing was not a surprise. I don't expect the Service PMIs to weigh on the euro unless the releases are below expectations. The markets will be keeping a close on the Fed minutes from the June meeting, which will be released on Wednesday. The Fed delivered a 0.25% hike at the June meeting and the markets are widely expecting a repeat in July, which would bring the cash rate to a range of 5.25%-5.50%. The markets have fallen into line with the Fed's aggressive stance, and investors are no longer expecting a rate hike or two before the end of the year. Fed Chair Powell has hinted at one more rate hike after July before the end of the year and there are growing concerns that if the Fed continues to increase rates the economy will tip into a recession. The spread between 2-year and 10-year Treasury note yields hit its widest level since 1981 on Monday, raising fears of a recession. A yield curve inversion is considered a reliable indication of a recession and the current inversion has been in place since July, stoking concern about the direction of the US economy. EUR/USD is testing support at 1.0908. This is followed by support at 1.0838 1.0980 and 1.1050 are the next resistance lines
by OANDA
SOFR: Farewell to LIBORCME: SOFR ( CME:SR31! ) On June 30th, SEC Chairman Gary Gensler posted a 3-minute short video on Twitter. In this educational piece titled RIP LIBOR, he explains what the London Interbank Offered Rate (LIBOR) is, and why its passing away is actually a good thing for consumers. As CFTC Chairman in 2009-2014 and SEC Chairman since 2021, Mr. Gensler oversaw the investigation of the 2012 LIBOR scandal and its replacement by the Secured Overnight Financing Rate (SOFR) in 2021 as the benchmark interest rate for US dollar. Eurodollar and LIBOR Offshore Dollar, the US currency deposited in banks outside of the United States, is commonly known as Eurodollar. Traditionally, offshore dollars were traded mainly among European banks. The name sticks to these days and applies to funds in non-European banks as well. A key advantage of trading Eurodollar is the fact that it is subject to fewer regulations by the Fed, being outside of the US jurisdiction. London is the largest trading hub for Eurodollar. The London Interbank Offered Rate came into being in the 1970s as a reference interest rate in the Eurodollar markets. By 1986, the British Bankers' Association (BBA) began publishing the US Dollar LIBOR daily. The BBA Libor was calculated based on interest rates reported by 17 member banks who together represented the bulk of Eurodollar transactions. Libor has been widely used as a reference rate for many financial instruments, including: • Forward rate agreements • Interest rate futures, e.g., CME Eurodollar futures • Interest rate swaps and swaptions • Interest rate options, Interest rate cap and floor • Floating rate notes and Floating rate certificates of deposit • Syndicated loans • Variable rate mortgages and Term loans • Range accrual notes and Step-up callable notes • Target redemption notes and Hybrid perpetual notes • Collateralized mortgage obligations and Collateralized debt obligations How important was Libor? It is a reference rate in the documentation by private trade association International Swaps and Derivatives Association (ISDA), which sets global market standard for OTC derivative transactions. In 2008, 60% of prime adjustable-rate mortgages and nearly all subprime mortgages were indexed to the USD Libor in the US. Furthermore, American cities borrowed 75% of their money through financial products that were linked to the Libor. Libor has been the indispensable global benchmark for pricing everything from credit card debt to mortgages, auto loans, corporate loans, and complex derivatives. CME Eurodollar Futures In 1981, the Chicago Mercantile Exchange launched Eurodollar futures, the first ever cash-settled futures contract. It quickly became the most liquid contract by CME. At its peak, over 1,500 traders and clerks worked at the Eurodollar pit on CME trading floor. Not to be confused with the Euro currency, Eurodollar futures contracts are derivatives on the interest rate paid on a notional or "face value" of $1,000,000 time deposit at a bank outside of the United. It uses the 3-month USD Libor rate as its settlement index. The late Fred D. Arditti, CME economist, is credited as the brain behind Eurodollar futures. Eurodollar futures are priced as a Money Market instrument. The CME IMM index is used to convert a coupon-bearing instrument such as bank deposit, into a discounted instrument that does not make regular interest payments. For instance, a futures price of 95.00 implies an interest rate of 100.00 - 95.00, or 5%. The settlement price of a Eurodollar futures contract is defined to be 100.00 minus the official BBA fixing of 3-month Libor on the day the contract is settled. The 2012 LIBOR Scandal The LIBOR Scandal was a highly publicized scheme in which bankers at major financial institutions colluded with each other to manipulate the Libor rate. As the scandal came to light in 2012, investigators found that the banks had been submitting false information about their borrowing costs to manipulate the Libor rate. This allowed the banks to profit from trades based on the artificially low or high rates. A dozen big banks were implicated in the scandal. It led to lawsuits and regulatory actions. After the rate-fixing scandal, LIBOR's validity as a credible benchmark was over. As a result, regulators decided that Libor would be phased out and replaced. If you want to learn more about the LIBOR scandal, feel free to check out the 2017 bestseller by David Enrich: “The Spider Network: The Wild Story of a Math Genius, a Gang of Backstabbing Bankers, and One of the Greatest Scams in Financial History”. What is the SOFR In 2017, the Federal Reserve assembled the Alternative Reference Rate Committee to select a Libor replacement. The committee chose the Secured Overnight Financing Rate as the new benchmark for dollar-denominated contracts. The daily SOFR is based on transactions in the Treasury repurchase market, where firms offer overnight or short-term loans to banks collateralized by their bond assets ,similar to pawn shops. Unlike LIBOR, there’s extensive trading in the Treasury repo market, estimated at $4.8 trillion in June 2023. This theoretically makes it a more accurate indicator of borrowing costs. Moreover, SOFR is based on data from observable transactions rather than on estimated borrowing rates, as was the case with LIBOR. The Federal Reserve Bank of New York began publishing the SOFR in April 2018. By 2021, SOFR has replaced most of the LIBOR-linked contracts. The LIBOR committee officially folded up on June 30, 2023. Chairman Gensler apparently chose this day to post his RIP LIBOR video to mark the end of an era. The difference between Fed Funds Rate and SOFR Fed Funds Rate is set by the Fed’s FOMC meeting, and SOFR is published by the NY Fed. However, they are very different. • Fed Funds Rate is considered a risk-free interest rate, and only member banks have access to this ultra-low rate through the Fed’s discount window. • SOFR is a commercial interest rate where banks charge each other. The NY Fed publishes the rate based on transactions in the US Treasury repurchase market. SOFR is similar to LIBOR because they are both commercial interest rate benchmarks. On the other hand, Fed Funds Rate is a policy rate set by the US central bank. CME SOFR Futures and Options CME Group launched the 3-month SOFR futures and options contracts in May 2018. The contracts were based on the SOFR Index, published daily by the New York Fed. SOFR futures contracts are notional at $2,500 x contract-grade International Monetary Market (IMM) Index, where the IMM Index = 100 minus SOFR. At a 5.215 IMM, for example, each contract has a notional value of $13,037.50. CME requires a $550 margin per contract. An interest rate move by a minimum tick of 0.25 basis point would result in a gain or loss of $6.25. At the beginning, SOFR contracts traded side-by-side with the Eurodollar contracts. By 2021, Eurodollar liquidity has transitioned to SOFR contracts. By April 2023, All Eurodollar contracts were delisted, and the transition was completed. For all intended purposes, you could think of the SOFR futures as the same as the legacy Eurodollar contracts, with the only notable exception being the settlement index switched from LIBOR to SOFR. On June 30th, the daily trading volume and Open Interest of SOFR contracts were 4,443,245 and 9,310,433 contracts, respectively. On the same date, CME Group total volume and OI were 23,769,103 and 104,221,083, respectively. On the latest trade day, SOFR accounts for 18.7% of CME Group’s trade volume and 8.9% of its total open interest. Indeed, SOFR has successfully replaced Eurodollar as new No. 1 contract at CME and is arguably the most liquid derivatives contract in the world. Where We Are at the SOFR Market On June 30th, the JUN SOFR contract (SR3M3) expired and settled at 94.785. This translates to the JUN SOFR rate of 5.215 (100-94.785). SEP 2023 (SR3U3) is now the new lead contract. It settled at 94.595 and implied a forward SOFR rate at 5.405 (100-94.595). This shows that the futures market expects a rate increase in the next Fed meeting. Like Eurodollar futures, rising futures price will confer to declining SOFR rate, as rate is equal to 100 minus futures price. Similarly, a decline in futures price equates to a rising SOFR rate. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CME:SR31!Education
by JimHuangChicago
9
Gold Hits Lowest Level In Three Months, Threatens $1,900 SupportGold prices dropped for a second day in a row on Wednesday as recent (but not new) hawkish comments from Federal Reserve Chair Jerome Powell boosted the US dollar weighing on the yellow metal. At the time of writing, spot gold price, XAU/USD, is trading at $1,912 an ounce, just below its opening price, after hitting a three-and-a-half-month low of $1,902 earlier on the day. Speaking at the European Central Bank (ECB) Forum on Central Banking, Fed's Powell noted that while the United States is vulnerable to a recession, the chances are slim. Regarding interest rates, Powell said that he would not rule out back-to-back rate hikes. "Although policy is restrictive it may not be restrictive enough and it has not been restrictive for long enough," he added. Hawkish comments from Powell reignited USD strength, pressuring the yellow metal that struck its lowest level since mid-March before trimming losses. From a technical perspective, the XAU/USD pair holds a mildly bearish short-term bias, although it has managed to keep above the critical $1,900 area. While the RSI and the MACD indicators are in negative territory, the 20- and 100-day simple moving averages (SMAs) are completing a bearish cross. The metal would need to recover above $1,943 (SMAs crossover level) to ease the immediate pressure and target a steeper bounce to the $1,970 area. On the other hand, the loss of the $1,900 mark would add further pressure on the price, with the following significant support seen at the 200-day SMA at the $1,855 zone.
OANDA:XAUUSD
by Alex_Boltyan_FXAnalyst
1
Price Waiting for News Releases | Tech/Fundamental Analysis Traders, today we have those news releases for Wed, 28 Jun 2023.. Buyside liquidity then sellside liquidity.. Use these news as your trigger and most importantly, confirm your entry.. This view is linked to my previous view, please review it.. Price may reprice higher than H2 FVG and into my "sell area" marked in my previous idea.. Those are areas of "possible" reversal points, and entry should be confirmed in the proper time.. I'll keep you updated ✅
Short
by MST_Trader
WTI: Crude Oil May Have Bottomed OutNYMEX: WTI Crude Oil ( NYMEX:CL1! ), Micro Crude Oil ( NYMEX:MCL1! ) The talk of inflation deceleration created a wishful misperception. Does a CPI read from 9.1% to 4.0% mean price relief for consumer? Certainly not. Something costed $1 last year will go up to $1.04 this year on average. What really comes down is the rate and the pace of price increase, but the absolute price level has forever gone up. This makes the real decline in energy prices more extraordinary: • On June 23rd, WTI crude oil ( NYSE:CL ) August futures settled at $69.16 a barrel. This is 44% below last June’s high of $123.70; • At $2.44 a gallon, RBOB gasoline futures ( SIX:RB ) declined 34% year-over-year; • At $2.37 a gallon, ULSD diesel futures ( EURONEXT:HO ) price dropped 45% YoY. • At the retail level, the American Automobile Association reports the national average regular gasoline price at $3.57 a gallon on June 25th, down 27% YoY; • The AAA diesel price is now $3.89/gallon, falling 33% YoY. However, the era of low energy prices may be coming to an end. I am convinced that the market dynamic has changed. Elevated geopolitical tension, higher demand and a weak dollar could help pull crude oil out of the bottom, and onto an upward trajectory. Global Tension Forms Solid Price Support A week after the start of Russia-Ukraine conflict in February 2022, Crude oil futures shot up 30% from below $90 to $115. WTI peaked at $121 in June as the fighting continued. Since then, high inflation and rate hikes raised the risk of global recession. As the demand outlook dimmed, oil price lost support and trended down in the past year. Geopolitical tension may have been placed on the back burner, but it never went away. Last Saturday, the Russian private army Wagner Group mounted a short-lived rebellion against the Kremlin. What this means to the Ukraine conflict and the stability of Russia itself remain to be seen. Geopolitical crisis could cause supply shock and raise the price of crude oil. My observation is that global tension will be at an elevated level throughout 2023 and 2024. Oil Demand is Expected to Recover Last July, I called the peak of gas price in this report. I discovered that record $5 gas had caused demand to fumble. AAA gas price surprisingly declined at the start of the traditional summer driving season. Things look different now. Retail gas price creeped up 50 cents (+13%) since December. Many stations popped up gas price ahead of the July 4th holiday. With a still strong job market and inflation in check, consumers are taking their summer vacations. A second key demand factor comes from the US government. The Biden Administration has drawn down the Strategic Petroleum Reserve (SPR) to fight high oil price in the last two years. The Energy Information Agency data shows that the SPR holds 350 million barrels of crude oil as of June 16th. This is 285 million barrels less than the level on January 24th, 2020, the week when President Biden first took office. SPR is now at a critical four-decade low level. The Department of Energy has begun replenishing the SPR. It announced buying up to 3 million barrels in May, and recently planned additional purchase of 6 million in August. Thirdly, the risk of global economic recession is now lower than what we previously feared. This is my most important reason for raising the outlook of future oil demand. • The Federal Reserve implemented ten consecutive interest rate increases since March 2022. US inflation rate has declined from the peak of 9.1% to 4.0% in May. Lowering inflation may have averted the US economy from falling on a hard landing. • The banking failures, from Silicon Valley Bank to Signature Bank, First Republic, and Credit Suisse, have met with swift government rescue efforts. We have so far managed to contain these from spreading to systemic risk. • The resolution of US debt ceiling crisis helped avoid a US default and a likely global financial crisis it may trigger. According to the USDebtClock.org, the US national debt is now $32.1 trillion, which is $700 billion more than the previous debt limit. • The Biden-McCarthy deal in federal spending limits ensures that government budget will not be cut. The federal government accounts for one quarter of the US economy. As bad as it may sound, government spending spree with borrowed money does contribute to near-term economic growth. We just kick the can forward and leave the debt burden to future generations. A Weak Dollar Supports Higher Oil Price Last year, the main investment theme of global commodities market was “Strong Dollar, Weak Commodities” and “High Rate, Low Price”. We are now in a reverse course. The US dollar index peaked at 114 in last September. While the Fed raised rates aggressively, other countries were slow in response, resulting in widening interest rate spreads between the US dollar and major foreign currencies. Since then, the Fed reduced the size of rate hikes from 75 bp to 50 and then 25, while UK and ECB caught up with bigger rate increases. The dollar index has fallen to 100 by April. The Fed paused rate increase in its June meeting. Although it emphasizes in fighting inflation, there is no question that the monetary tightening cycle is now in its last stretch. NYMEX WTI Crude Oil Futures With the key factors discussed above, plus the OPEC having incentive to cut output, I could see WTI going back to the $80-$90 range. December WTI (CLZ3) currently quotes $69.1 a barrel. Each contract has a notional value of 1,000 barrels. Margin requirement is $5,000 to place one contract. Hypothetically, if Dec futures goes up to $80, one long contract would gain $10,900 (=10.9*1000). Theoretical return would be +118% (=10,900/5,000-1), excluding transaction fees. The risk of long WTI is falling oil price. If CLZ3 falls to $65, a long position would lose $4,100. This would result in a Margin Call, with the Exchange requiring the trader to deposit fund and bring the account balance back to $5,000. Alternatively, we could consider the Micro Crude Oil Futures ( CSE:MCL ). Contract size is one tenth of the standard CL contract. And so is the margin requirement. Everything else works the same. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
NYMEX:CL1!Long
by JimHuangChicago
22
DXY: Will the rising dynamic trendline hold?Tough times for the USD; the market didn't buy Powell's hawkish attempt, ECB went as expected and Dixie has plummeted today. I do think the USD crosses will get a breather retracement tomorrow, so we could see a bounce off the rising trendline on HTF's. If we break the wedge to the upside then this could lead to a higher low and could signal a reversal with a higher high. If the trendline is broken, and we then go on to make a new low then I think the USD will continue to struggle, what with the ECB and BOE continuing to hike, and showing some good data. Watching and waiting...
TVC:DXY
by Finchcliffe
EUR/USD Pulls Back From Six-Week Highs As Powell TestifiesThe EUR/USD pair retreated on Thursday after hitting six-week highs during the European session amid a broad-based dollar pullback. However, the US currency bounced at the beginning of the New York session after Federal Reserve Chair Jerome Powell's second-day testimony before the US Congress. At the time of writing, the EUR/USD pair is trading at the 1.0965 zone, 0.2% below its opening price, having struck its highest level since May 8 at 1.1013. During his testimony before the Banking, House and Urban Affairs Committee in the US Senate, Powell reiterated that the central bank still has a long way to go and reassured that monetary policy is not becoming less effective in combating inflation. He also backed what the dot plot showed last week, the Federal Open Market Committee (FOMC) broadly feels "it will be appropriate to raise rates again this year and perhaps two more times." His hawkish remarks boosted US yields and helped the greenback to make a U-turn and reverse daily losses. From a technical perspective, the EUR/USD pair holds a short-term positive bias according to indicators on the daily chart, while the 20- and 100-day simple moving averages (SMAs) are close to completing a bullish cross. On the upside, the 1.1000-10 zone stands as the immediate resistance level, followed by 1.1070 and the 1.1100 level. On the downside, the 1.0900 area stands as immediate support, followed by the critical short-term level given by the convergence of the 20- and 100-day SMA at the 1.0810 zone.
by Alex_Boltyan_FXAnalyst
GBPUSD: My 4 scenarios for this weekThese are just my ideas, what I’m expecting, and why, with this week’s the big fundamentals. Overview Big market-moving news this week with Wednesday’s UK CPI, Thursday’s BoE Interest Rate Decision and Forecast, there is also FED Powell’s testimony in between the UK events on Wednesday. Several things could play out with the UK news, which is what my scenarios are based on. I’m expecting Powell to be hawkish because even though it’s clear that the US is on top of inflation, they are still double their target and thanks to their economic performance they have room to keep tightening and can still avoid recession, imho. The BoE on the other hand have a massive predicament. Inflation is out of control, far worse than the other G7 economies. Interest rate rises are squeezing the economy, UK mortgage rates are now hitting 6%. In my opinion another 1.25% interest rates will cause recession. The BoE moved too slow and are behind inflation, they have to keep hiking to do anything about it, but there will be a tipping point where the market sees this as a negative for the GBP. UK Inflation / Interest Rates BoE have consistently under-estimated inflation through this period. This time their forecast is higher than the previous month forecast (8.5% compared to 8.3% previous, inflation fell to 8.7% last time so I think they’ve been more realistic with their prediction this time). If inflation is coming down (I think it is), then we could see a better than forecast reduction (red), which could be bad for GBPUSD. If it comes in lower (red) then it’s ‘more’ likely there’ll be a 0.25% rate hike, this is priced in, and I think this will cause GU to fall. If BoE are brave enough to go with the 0.5% outside prediction, then this could cause GU to rise. If Wednesday’s CPI number shows inflation is above predication (green) (and likely to be rising as it was 8,.7% last time and the predication this time is 8.5%), then this further demonstrates that the BoE have been way off the mark in controlling it compared to the rest of the G7, which is not good. I do think short term this will be positive for GU, but only for banks making money, it’s terrible for the UK economy and the BoE. If it is green and BoE only raise rates by 0.25% then I think this may send GU down as it’s a further demonstration of their ineptitude. If they do go with the 0.5% hike in this scenario, then this could send sterling higher in the short term. Either way and in each scenario, I think GU will struggle to get beyond 1.29 in this visit based on long term dynamic trendline, overall down-trend, a bubble of a credit based economy, better performing US economy and the US being the global currency (and expecting China performance below expectations), etc etc, and breathe…. Also, in technical news, I’m also seeing some divergence on the RSI, and GU is overbought. My Scenarios Here’s my scenarios on the chart, end of today I’m expecting to be around the 1.27 level on the chart based on retracement from Friday’s high and DXY having some room to move up to resistance (around 1.03), but let’s see what happens today and I'll review this again this evening. 1. Red CPI / 0.25% Hike This is an inflation figure that comes in below the 8.5% prediction and the BoE raising rates by 0.25%. This is what I think will happen and it will mean reversal. 2. Red CPI / 0.5% Hike This is an inflation figure that comes in below the 8.5% prediction and the BoE raising rates by 0.5%. This is what should happen if the BoE are brave enough, but I think it will worry markets about recession. 3. Green CPI / 0.25% Hike This is an inflation figure that comes in above the 8.5% prediction and the BoE raising rates by 0.25%. This is a terrible situation, inflation going up and the BoE still not having the balls to make up for lost time and tackle it head on. 4. Green CPI / 0.5% Hike This is an inflation figure that comes in above the 8.5% prediction and the BoE raising rates by 0.5%. In this scenario this is what I believe the BoE should do, it will likely cause GU to go up, but as I’ve said I personally think topside is limited by the prevailing downtrend. In this scenario there will be growing fears of a recession, change of government will be pretty much a given, so overall I still think this will be bad for GU in the medium term. These are just my thoughts as we go into the next few days. Interested to hear your comments so I can keep learning and adjusting my thinking!
by Finchcliffe
29
gold to make a reverse movement above 1951#XAUUSD the price have created a two double pattern which will now make a reverse to hold first on 1943 limit because its has drop below 1920-1918 yesterday which is a bearish confirmation price decline, but now the price is trying to make an hold above two sideways which first target will be 1936 for a short bullish confirmation then a possible 1943 limit will hit. if possible gold makes a retest back to 1921 in H2 then we can see a drop below 1913 limit but our possible today high target is 1951 depending on the confirmation we have
FOREXCOM:XAUUSDLong
by newbeginneracademy
2
The Gold Standard and the Global Monetary SystemI. Introduction The history of international monetary systems has been a story of constant evolution. Of the many systems that have been used over the centuries, the Gold Standard stands out for its longevity and its critical role in shaping the world's economic landscape. This essay will first discuss the Gold Standard, then delve into President Richard Nixon's monumental decision to sever the tie between the U.S. dollar and gold, known as the 'Nixon Shock.' This discussion will segue into the subsequent transformation of the global monetary system, culminating in an analysis of our present-day monetary era. II. The Gold Standard Era The Gold Standard, which flourished between the late 19th century and the early 20th century, was a monetary system where the value of a country's currency was directly linked to gold. Each country promised to convert its currency into a fixed amount of gold upon demand. This system provided a stability that fostered international trade and investment, as it offered predictability of exchange rates and a constraint on inflation. However, it also meant that national monetary policies were subordinated to the need to maintain gold parity, thereby constraining a government's ability to respond to domestic economic conditions. III. Nixon's Depreciation and the End of the Gold Standard In 1971, amidst growing economic pressures, President Richard Nixon declared that the United States would no longer exchange gold for U.S. dollars held in foreign reserves, effectively ending the Gold Standard. This move was initially designed as a temporary measure to protect U.S. gold reserves, which were dwindling due to persistent trade deficits. However, the 'Nixon Shock' proved to be a permanent shift in international monetary policy. Nixon's move unshackled the U.S. dollar (and other global currencies) from the constraints of gold, allowing for more flexible monetary policies. This change allowed governments to respond more efficiently to economic downturns by manipulating the money supply. Yet, it also introduced a new era of exchange rate volatility and inflation risk, challenges that economies continue to grapple with today. IV. The Transformation of the Global Monetary System The end of the Gold Standard marked the transition to the era of fiat money—currency that is backed by the full faith and trust in the government that issues it, rather than a physical commodity like gold. Fiat money systems have provided governments with greater flexibility to manage economic conditions through monetary policy, as they can adjust the money supply to influence interest rates, manage inflation, stimulate growth, or address economic crises. However, the reliance on faith and trust in the government has also led to episodes of hyperinflation and economic crises in countries where that faith was misplaced or abused. V. The Present-day Monetary Era In the current monetary era, central banks, like the Federal Reserve in the U.S., use open market operations and other monetary policy tools to control the money supply and influence economic conditions. Decoupling from gold has also facilitated the rise of digital currencies and novel monetary ideas like cryptocurrency, reshaping our understanding of money and value. However, this freedom has its downsides; the absence of a physical constraint like gold can lead to fears about runaway inflation, especially in times of significant increases in the money supply, such as the response to the COVID-19 pandemic. VI. Conclusion The Gold Standard, Nixon's Shock, and the transformation of the global monetary system offer key insights into the strengths and weaknesses of different monetary systems. While the Gold Standard provided a stability that fostered international trade, it limited the ability of governments to respond to domestic economic conditions. The Nixon Shock and the transition to a fiat money system have provided greater flexibility, but also introduced new challenges in terms of inflation risk and exchange rate volatility. As we navigate our present-day monetary era, it is essential to remember the lessons of the past while staying open to new innovations and ideas in our ongoing quest to develop a monetary system that best serves the needs of society.
FX_IDC:XAUUSDEducation
by financialflagship
EUR/USD possible bullish reversal today or tomorrow Building permits and housing starts were better than forecast, this may cause some selling in EUR/USD.... The HTF daily chart is both short term and intermediate term bullish, However the market is currently trading within a HTF 4hr timeframe gap which was formed last week... i am anticipating that the market will fill this 4hr gap due to todays bearish EUR/USD news, once it fills the gap i believe that the market will continue upwards to at least test the current daily timeframe short term high possibly due to the pause on interest rate hikes from the FED (interest rates > building permits) i feel as if interest rates currently have a stronger higher timeframe influence on the market... I AM LOOKING FOR A LONG ENTRY THIS WEEK, ANY SHORTS WILL BE INTRADAY POSITIONS, I AM LOOKING TO SWING LONGS FOR THE WEEK/INTO NEXT WEEK.... THESE ARE MY PERSONAL THOUGHTS, THIS IS NOT FINANCIAL ADVISE!
Long
by TDcharts
EUR/USD flirts with 1.08 leading into FOMC and ECB meetingsEUR/USD broke above the 1.0800 handle yesterday thanks to a weak US inflation report, yet price action now finds itself back beneath that key level leading into today's FOMC meeting (and tomorrow's ECB meeting). But as the pair has risen over the past two weeks, it may take a particularly dovish meeting from the Fed to drive it materially higher. Therefore, we're looking for evidence of a swing high and for a move back towards the 1.0700 handle. A bearish divergence is forming on the RSI 4-hour chart and we've identified two resistance zone around the 1.0800 and 1.0860 area we'd consider fading into, or seeking evidence of a swing high. Otherwise, a stop above 1.0800 could suffice should momentum turn lower without breaking back above 1.0800.
Short
by CityIndex
Bulls circle USD/JPY ahead of the FOMC meetingWhilst the US dollar has mostly retraced over the past couple of weeks against FX majors, it has held its own against then Yen. In fact, momentum is now turning higher after forming a triple bottom ~139 and breaking above a retracement line. The most traded price during the prior consolidation is 139.55, which could provide a level of support if prices retrace ahead of its next leg higher. Take note that overnight implied volatility has blown out ahead of the FOMC, so be prepared for some volatility before the next major move takes place.
Long
by CityIndex
EUR/USD surges after ECB rate hikeEUR/USD is trading at 1.0948 in Europe, almost unchanged on the day. On Thursday, the euro surged 1.05% in the aftermath of the ECB rate hike. The ECB raised rates by 25 basis points on Thursday, bringing the benchmark rate to 3.50%, the highest level since 2001. The markets were not surprised by the move but ECB President Lagarde's hawkish comments following the rate announcement may have surprised some and the euro responded with massive gains. In her press conference, Lagarde said that barring a material change, it was "very likely" that the ECB would continue raising rates in July. Lagarde dampened any thoughts of a pause, even though the eurozone economy remains fragile and growth is expected to be weak. Headline inflation has been falling sharply in the eurozone, as energy prices have fallen. This is positive news, but the ECB is more concerned about core inflation, which is a better gauge of where inflation is headed. The core rate, which excludes energy prices, has been stickier than expected. Inflation has also cooled due to the ECB's rate tightening, but the current rate of 6.1% is far too high for the central bank, which is likely to hike again in July. The Federal Reserve dramatic decision on Wednesday contained two important aspects. First, the Fed took a breather and held rates after 10 straight rate increases. Second, the Fed signalled that the pause did not indicate the end of the current rate-tightening cycle, as the Fed was projecting two more hikes in the second half of the year. Fed Chair Powell reiterated in his press conference that the inflation battle "has a long way to go" and there is every indication that Powell will keep hammering away with rate hikes until inflation falls to the 2% target. There is resistance at 1.1050 and 1.1147 1.0922 and 1.0854 are providing support
by OANDA
CDR SUPPORTLast time with base and supply support and then "worked out" (xD) them based on the price behavior pattern. Today's behavior from the structure break line is determined from early September / early October, confirmation with fibonacci (bottom {0} + peak{1} ) that the price is applied to the creation. Additional fuel for speculation is a special Cyberpunk DLC, and I believe that if the promotional materials are encouraging, there is a better chance that what I wrote will happen. Even if a game will be bad. I assume a stop loss: PLN 94.55 Take profit: Transfer of the local peak PLN 150, PLN 180, PLN 200,
GPW:CDRLong
by kiTajj_
2
GOLD: awaiting the FOMC decisionIn a few hours we will know if FOMC decides to raise interest rates by 25bp or if there will be a pause in monetary policy. Having said that, if we look at 1H chart we still have the same technical structure (see analysis below), which is still valid at the moment. With this in mind it would be great if TVC:GOLD triggered a swing as shown on chart (first bearish then bullish), I say that because I really like the Pin Bar at 1,971 . What will happen on gold market? In the short term it's hard to say, but today's session will certainly be our driver for a few sessions/weeks. PREVIOUS ANALYSIS (Click on Chart below) FUNDAMENTAL ANALYSIS (Long term) (Click on Chart below) PRE-FOMC ANALYSIS (Click on Chart below) Trade with care! Like 🚀 if my analysis is useful. Cheers!
OANDA:XAUUSD
by TheAnonymousBanker
3
EUR/USD Challenges 1.0900 After ECB Delivers Rate HikeThe EUR/USD pair extended gains into a fourth consecutive day on Thursday following the European Central Bank's (ECB) decision to raise its main rates by 25 basis points, as expected. At the time of writing, the EUR/USD pair is trading at the 1.0880 area, recording a 0.7% daily gain, having touched its highest level in a month at 1.0894. The European Central Bank announced its decision to raise the main financing rate to 4.00%, the marginal lending to 4.25% and the deposit facility rate to 3.50%. In the subsequent speech, ECB President Christine Lagarde fueled the hawkish narrative as she stated the board is "not thinking about pausing." Meanwhile, the Federal Reserve decided to skip a rate increase on Wednesday after ten consecutive increases. However, the dot plot and Chair Jerome Powell's hawkish words slammed prospects of rate cuts for the remainder of the year. From a technical perspective, the EUR/USD pair's short-term bias is bullish, according to indicators on the daily chart, while the price has managed to climb back above the 20- and 100-day simple moving averages (SMAs) and now challenges the critical 1.0900 resistance area. A break above the psychological level could fuel bullish momentum and send the EUR/USD to retest the 1.0970 resistance zone ahead of 1.1000. On the other hand, the 100-day SMA at around 1.0805 is the key support to watch as a drop below would deteriorate the short-term outlook, exposing the 1.0700 zone en route to May's lows at 1.0635.
by Alex_Boltyan_FXAnalyst
USD/JPY - Yen slides to 7-month low after Fed, BOJ meeting nextThe Japanese yen has taken a tumble on Thursday. In the European session, USD/JPY is trading at 141.24, up 0.81%. Earlier today, the yen fell as low as 141.50, its lowest level since November. The markets had widely expected the Federal Reserve to pause at the Wednesday meeting, especially after a favourable inflation release on Tuesday. Jerome Powell delivered a hawkish pause, as the rate statement signalled more rate hikes were on the way and the Fed revised upwards its growth and inflation projections for the fourth quarter. As well, the dot plot indicated two more small rate hikes this year. Powell said after the decision that the Fed had not made a decision about the July meeting, in keeping with his stance that each rate decision will be determined based on the data. The markets aren't buying that and have priced in a 71% probability of a July hike, according to CME FedWatch. Inflation is moving slower, but there's still a way to go before the 2% target is achieved and the markets expect Powell to keep his foot on the rate pedal after yesterday's brief time out. The markets will shift their attention to the Bank of Japan, which meets on Friday. The BoJ has been an outlier with regard to rate policy, adhering to an ultra-loose monetary policy. The Bank is expected to maintain key policy settings and may comment on the depreciation of the yen. The currency's sharp drop on Wednesday triggered verbal intervention from Chief Cabinet Secretary Hirokazu Matsuno, who voiced the standard line that excessive moves in the exchange rate were not desirable. The government has warned in the past that it could intervene to prop up the yen and made good on its threats in December, stunning the markets. If the yen's slide continues, we can expect more warnings out of Tokyo. USD/JPY is testing resistance at 141.21.  Above, there is resistance at 141.97 There is support at 140.29 and 139.53
by OANDA