Original article by Chris Beauchamp, Chief Market Analyst at IG
Title: Market Outlook: FTSE 100 Approaches Record High, USD/JPY Finds Support, and Silver Continues Uptrend
The global financial markets are navigating a dynamic landscape, with major indices and commodities showing significant movements. As the FTSE 100 inches closer to its record high, traders are closely examining key currency pairs and commodities for potential trading opportunities. In particular, the USD/JPY pair is showing signs of stability after weeks of volatility, while silver is extending its bullish trend.
This market recap provides a detailed technical analysis of key assets: the FTSE 100, USD/JPY, and silver. These analyses explore price movements, current trends, and areas of potential support and resistance to aid traders in making informed decisions.
FTSE 100 Nears All-Time High
The FTSE 100, the benchmark index of leading UK companies, has shown resilience despite uncertain macroeconomic conditions. Investors have responded positively to trends in inflation, interest rates, and corporate earnings, giving the index momentum.
Key technical highlights:
– The index is trading near its previous all-time high of 8,047, recorded earlier in 2023.
– Price action continues to reflect a firm bullish trend, with higher highs and higher lows forming consistently.
– The 50-day Moving Average (MA) acts as dynamic support and has been successfully defended by bulls.
Friday’s session brought intraday highs close to the record level before a minor retreat. This pause is seen as a healthy consolidation, rather than a trend reversal. Market participants continue to monitor whether the FTSE 100 gains the momentum necessary to decisively break through its peak.
Near-Term Outlook:
– A breakout above 8,047 would signal continuation of the longer-term uptrend.
– Key resistance sits at the previous high; a close above this level may trigger follow-on buying into early summer.
– Immediate support is identified near the 7,800 level, followed by the 50-day MA around 7,750.
Investor sentiment is supported by a combination of stabilizing inflation levels in the UK, Bank of England rate expectations, and relative performance from exporters benefitting from a softer British pound.
USD/JPY Finds Support Amid BoJ and Fed Divergence
The Japanese yen has experienced renewed downward pressure against the US dollar, particularly following dovish monetary policy rhetoric from the Bank of Japan (BoJ). Economic data continues to reflect sluggish growth in Japan, reinforcing the central bank’s cautious stance on tightening.
Technical snapshot:
– USD/JPY found solid support near the 155.0 level.
– A strong rebound above 156.50 has taken the pair back into bullish territory.
– The price is now trading above both the 50-day and 100-day MAs, indicating a medium-term bullish bias.
After confronting intervention speculation from Japanese authorities during the late-April surge past 160.0, the currency pair corrected lower. However, the pullback was short-lived, and price regained upside momentum quickly, especially amid contrasting US monetary policy expectations.
Supporting Factors for USD Strength:
– Hawkish Fed commentary suggests that rate cuts may be delayed until later in 2024.
– Robust economic data in the US, including sustained job growth and moderate inflation, underpins demand for the dollar.
– The yield differential between US Treasuries and Japanese government bonds remains wide, encouraging carry trade strategies.
Resistance and Support Levels:
– Resistance: The May swing high around 160.20 serves as short-term resistance.
– Support: Initial support at 156.50, followed by stronger demand near 155.0.
A sustained move above 157.85 could open the door to testing the 160.0 level once again. Meanwhile, any signs of unexpected intervention from Japanese monetary authorities could cause short-term volatility.
Silver Recovers and Maintains Uptrend
Silver continues to gain ground, supported by both technical momentum and fundamental drivers. The precious metal
Explore this further here: USD/JPY trading.