CURRENCIES

EURO (EUR/USD, EUR/GBP) technical analysis:

• Fed speak to dominate today’s scheduled event risks (Williams, Waller)
• EUR/USD drifts lower in search of a catalyst
• EUR/GBP eyes support ahead of UK CPI print

Fed Speak to Dominate Today’s Scheduled Risk Events:

• Quiet day on the economic calendar in a generally quiet week.
• Euro PMI data on Thursday is the next notable event.
• Last few days of the month feature US PCE and EU inflation data.
• Fed speakers continue to promote the idea of maintaining high interest rates to control inflation.
• Afternoon speakers: Fed Governor Christopher Waller and New York Fed President John Williams.
• Williams previously hinted at potential rate hikes if inflation does not improve; current focus shifts to timing rate cuts.

EUR/USD Drifts Lower in Search of a Catalyst:

• EUR/USD shows a slight downward trend after bouncing off channel resistance.
• Quiet week favors higher-yielding currencies like the dollar.
• The pair reversed before reaching overbought conditions, similar to the trend in March.
• Resistance at the upper limit of the ascending channel; support at channel support, 1.0800 psychological level, and 200-day SMA.
• A catalyst may emerge towards the end of next week with US PCE and EU inflation data.

EUR/USD Key Data:

• Mixed Sentiment: Data provided by clients are net short.
• Daily Changes: Longs +15%, Shorts -1%, Open Interest +5%.
• Weekly Changes: Longs -10%, Shorts +8%, Open Interest 0%.

EUR/GBP Eyes Support Ahead of UK CPI Print:

• EUR/GBP started the year within a defined trading range, showing bullish momentum after breaking out.
• Bullish advance struggled, facing resistance at the 200-day SMA.
• Current selling shows fatigue, with potential support from trendline.
• UK CPI data tomorrow could influence the pair’s direction.
  • Expectation of a notable move lower from the prior month.
  • Disappointment may lift sterling if data fails to meet low expectations.
  • April data might surprise the upside with price rises and index-linked increases.
  • If CPI meets or falls below consensus, EUR/GBP may rise as markets anticipate a BoE cut sooner.

STOCK MARKET

Expectations for Nvidia’s Earnings:

• Traders are anticipating a significant move in Nvidia’s shares post-earnings on Wednesday.
• Nvidia’s options suggest an 8.7% swing in either direction by Friday.
• This implies a market cap change of $200 billion, exceeding the market cap of about 90% of S&P 500 companies.

Nvidia’s Market Data:

• Current Price: $947.80 +23.01 (2.49%) at close, $951.43 +3.63 (0.38%) pre-market.

Historical Comparison:

• The implied move is less than the 16.4% jump after the last quarterly earnings.
• Also lower than the average 12% move priced in for the last eight quarters.

Analyst Insights:

• Chris Murphy, Susquehanna Financial Group: “Volatility and expectations were higher previously.”
• Nvidia’s stock, up 87% this year, is crucial for the AI industry with a market value of $2.3 trillion.
• Wall Street anticipates a strong quarterly report from Nvidia.

Broader Market Impact:

• AI-related gains are spreading to other sectors like power, commodities, and utilities.
• BofA strategists expect Nvidia to drive 9% of S&P 500 earnings growth in the next 12 months, down from 37% over the last 12 months.

Options Market Sentiment:

• Matt Amberson, ORATS: Implied volatility for out-of-the-money calls and puts is equal, indicating potential for both upside and downside moves.
• Traders expect up moves to be as violent as down moves.

Projected Earnings:

• Expected earnings: $5.59 per share.
• Quarterly revenue: Expected to rise to $24.65 billion from $7.19 billion a year ago (LSEG data).

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