Key highlights EUR/USD started a fresh decline from the 1.0640 resistance zone. A key bearish trend line is forming with resistance near 1.0470 the 4-hours chart. EUR/USD technical analysis Looking at the 4-hours chart, the pair traded below the 1.0500 support, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours). The bears even pushed the pair below the 1.0400 level. A low is formed near 1.0349 and the pair is now consolidating losses. On the upside, an initial resistance is forming near the 1.0420 level. The next major resistance is near the 1.0470 level and a key bearish trend line on the same chart. A clear move above the 1.0450 and 1.0470 levels might push the pair towards the key 1.0500 resistance zone. If there is no upside break, the pair could extend decline below the 1.0350 level. The next major support is near the 1.0300 level. Any more losses may perhaps push EUR/USD towards the 1.0250 level.

Global stocks ended the week with a strong rally, the S&P 500 closed up more than 2%, while the Tech heavy Nasdaq Composite index was up nearly 4%. However, this was not enough to reverse the steep sell off from earlier in the week, and the S&P 500 still logged its sixth straight weekly decline, the first time it has done so since 2011. After a few false moves, stocks were finally able to break out of their cycle of declines, possibly on the back of some good news about the potential end to China’s strict Covid lockdowns and general oversold conditions attracting bargain hunters. There are also some early bullish signs that could help markets to recover as we move to the second half of May. Peak inflation hopes along with resilient corporate profit margins and 85% of companies beating their EPS expectations for Q1, expectations of more China policy support and a push back by a number of Fed officials on the prospect of a 75bp rate hike have all helped to lift the market mood. However, there are still risks to be aware of, including stagflation fears, a global shift to more hawkish monetary policy, and forced selling in equity markets on the back of steep declines, could all hinder a potential rally in risky assets this week.  As mentioned above, there are stumbling blocks to a prolonged recovery in market assets. Thus, whether or not a recovery can be sustained could depend on two key fundamental releases this week.  1. UK CPI data April’s UK CPI data is expected to be mega when it is released on Wednesday; analysts are expecting a rise in the monthly headline rate of 2.6%, which would push the annual rate of headline inflation up to 9.1%, a huge jump from the 7% recorded in March. If expectations are correct, this would be the highest annual rate of inflation recorded since the index began in 1989. The reason for this is the 54% rise in the energy price cap, which has sent energy prices soaring. This jump in headline inflation is expected, and the Bank of England now expects prices in the UK to peak above 10% this autumn, when the energy price cap is lifted once again. Thus, a market mechanism that was designed to be consumer friendly, is actually the main reason why UK inflation rates are higher than elsewhere, and why they will take longer to decline. The BOE is right to be worried about growth, as persistently high inflation data is expected to crush growth in the second half of this year. Adding to Andrew Bailey’s list of concerns should be the expected jump in core CPI, which is expected to rise to 6.2% from 5.7% in March. The surprise increase in core CPI in March rocked faith in the pound last month. While a large increase in headline CPI is a given due to the energy price cap, confirmation that core prices are continuing to jump higher could cause further damage to a delicate pound.  The energy price cap is expected to have caused headline CPI to rise by 1.6%, there will also be significant upward pressure on prices from the increase in VAT on hospitality, higher water bills and a rise in telecoms costs. Higher prices have already dented growth in the service sector, which underperformed in March and weighed on GDP growth. This may just be the beginning for service sector contraction, and once this pillar of the UK economy starts to de-stabilise then it is only a matter of time before growth rates sink. Dodging a recession seems unlikely for the UK with this economic backdrop.  The FTSE 100 has held up fairly well during the recent bout of market turmoil, however the same can’t be said about the FTSE 250, which is still below the 20,000 mark, although it rose in tandem with blue chip stocks at the end of last week. Since the UK is nowhere near peak inflation, unlike the US, we think that UK asset prices could lag their US peers in the coming months, as the chances are higher that US stocks embark on a recovery sooner than their European peers. Likewise, the pound has also taken the brunt of concerns about the UK’s economic outlook. Wednesday’s data is likely to confirm the threat of stagflation in the UK, thus the pound could come under further selling pressure this week, especially versus the dollar, but also the euro. GBP/USD staged a feeble rally at the end of last week, at the start of trading this week it is lower once more. $1.2250 looks like a key level of resistance, with $1.2160 – the low from last week- acting as support for now. EUR/GBP may have fallen back from...

Crypto markets in turmoil as many collapse, Bitcoin regains $30,000. Equity and bond markets continue to suffer but end the week strongly. Elon Musk puts his Twitter deal on hold. The Fed stepped up its narrative this week and further confirmed what many had feared. The Fed wants markets lower, in everything. This was more or less confirmed by several Fed speakers this week on the topic of tightening financial conditions. Fed speakers said conditions needed to tighten and we and they know that means lower asset prices. The Fed is finally awake to the massive asset price bubble they have engineered and they are beginning to panic. Fed Chair Powell said this week that controlling inflation would be painful. He meant pain for the economy and asset prices. The mid-week CPI number further demonstrated just how far behind the curve the Fed has found itself. It is now looking more and more unlikely to ever catch up. Instead, a recession will do the job for it. Again we have been calling for this for some time. Why others have not does seem baffling. A quick look at history demonstrates the fallacy of a soft landing. Recessions always end inflation, nothing else works. Deutsche Bank was the first major Wall Street firm to predict a 2023 US recession and now many others are following suit. The bond market is the most notable predictor of a US recession. The front end yield (2-Year) has been rising in anticipation of an aggressive Fed hiking cycle but the far end (10-year) actually has been falling as the bond market predicts a US recession and so falling interest rates that far out the curve. The Fed though needs asset prices particularly in the risker side of things, to keep falling and it will get its way. Bond spreads have continued to widen and the spread between junk bonds and treasuries continues to widen, out to 477 basis points this week. That implies greater risk and tighter financial conditions. Less availability of credit for riskier assets so they fall hard and fast. Value is the place to be as this capitulation will soon reach its nadir. Growth stocks will continue to fall but value stocks should stabilize as the far end of the yield curve encourages investors to look for stability and safety.  Risk assets will also not have been helped by this week's collapse in crypto markets. Bitcoin has managed to steady itself but others are left in tatters. Credibility has been shaken and just when it was hoped institutional investors may diversify to crypto-assets this will likely ensure they do not. Dealing with collapsing bond and equity markets will be enough for now thank you very much. Anyway, we reached peak fear more or less this week and finally got the bounce everyone had been waiting for. This was flagged by the riskier side of the market, Bitcoin and ARKK for example all rallied in to the close on Thursday and set up Friday's strong move higher.  Source: CNN.com Source: AAII.com Perhaps the most impressive and hopeful side of Friday's rally was that the rally continued despite the bad news. We had Powell taking to the wires after Thursday's close but markets opened positively. We then had a pretty poor Michigan Consumer Sentiment reading but the market is currently extending its gains into the close.  We can see from the chart above sentiment is now lower than after the pandemic in March 2020. The shaded areas are US recessions so we are basically in that zone now with this reading. S&P 500 (SPY) forecast Finally, we got the long-awaited rally. Regular readers will note that we advised to hold for sub $400 on the SPY and Friday is confirmation of this strategy. Still, this move is not exactly reassuring. We currently have a 90% up day (90% of all stocks are positive). Closing above $400 will be the first test (we write this with one-hour remaining). Next week will be key. Earnings season is finished and it was strong. The Fed decision has been and gone and so too has the CPI number. So there is not much on the data or earnings front to shift the needle either way. Next week will be all flow and sentiment-related. This rally should extend if it indeed is a rally. $430 and $440 are the key resistance levels. $440 will be tough to break. Above $400 we feel there is a chance but need the SPY to hold this level on Monday to consolidate Friday's gains. So let's narrow it down. Close above $400 on Friday, hold those gains on Monday and we think indeed the rally to $430 and even $440 is on the cards. That's a classic sharp 10% bear market rally. That should get...

Crypto markets in turmoil as many collapse, Bitcoin regains $30,000. Equity and bond markets continue to suffer but end the week strongly. Elon Musk puts his Twitter deal on hold. The Fed stepped up its narrative this week and further confirmed what many had feared. The Fed wants markets lower, in everything. This was more or less confirmed by several Fed speakers this week on the topic of tightening financial conditions. Fed speakers said conditions needed to tighten and we and they know that means lower asset prices. The Fed is finally awake to the massive asset price bubble they have engineered and they are beginning to panic. Fed Chair Powell said this week that controlling inflation would be painful. He meant pain for the economy and asset prices. The mid-week CPI number further demonstrated just how far behind the curve the Fed has found itself. It is now looking more and more unlikely to ever catch up. Instead, a recession will do the job for it. Again we have been calling for this for some time. Why others have not does seem baffling. A quick look at history demonstrates the fallacy of a soft landing. Recessions always end inflation, nothing else works. Deutsche Bank was the first major Wall Street firm to predict a 2023 US recession and now many others are following suit. The bond market is the most notable predictor of a US recession. The front end yield (2-Year) has been rising in anticipation of an aggressive Fed hiking cycle but the far end (10-year) actually has been falling as the bond market predicts a US recession and so falling interest rates that far out the curve. The Fed though needs asset prices particularly in the risker side of things, to keep falling and it will get its way. Bond spreads have continued to widen and the spread between junk bonds and treasuries continues to widen, out to 477 basis points this week. That implies greater risk and tighter financial conditions. Less availability of credit for riskier assets so they fall hard and fast. Value is the place to be as this capitulation will soon reach its nadir. Growth stocks will continue to fall but value stocks should stabilize as the far end of the yield curve encourages investors to look for stability and safety.  Risk assets will also not have been helped by this week's collapse in crypto markets. Bitcoin has managed to steady itself but others are left in tatters. Credibility has been shaken and just when it was hoped institutional investors may diversify to crypto-assets this will likely ensure they do not. Dealing with collapsing bond and equity markets will be enough for now thank you very much. Anyway, we reached peak fear more or less this week and finally got the bounce everyone had been waiting for. This was flagged by the riskier side of the market, Bitcoin and ARKK for example all rallied in to the close on Thursday and set up Friday's strong move higher.  Source: CNN.com Source: AAII.com Perhaps the most impressive and hopeful side of Friday's rally was that the rally continued despite the bad news. We had Powell taking to the wires after Thursday's close but markets opened positively. We then had a pretty poor Michigan Consumer Sentiment reading but the market is currently extending its gains into the close.  We can see from the chart above sentiment is now lower than after the pandemic in March 2020. The shaded areas are US recessions so we are basically in that zone now with this reading. S&P 500 (SPY) forecast Finally, we got the long-awaited rally. Regular readers will note that we advised to hold for sub $400 on the SPY and Friday is confirmation of this strategy. Still, this move is not exactly reassuring. We currently have a 90% up day (90% of all stocks are positive). Closing above $400 will be the first test (we write this with one-hour remaining). Next week will be key. Earnings season is finished and it was strong. The Fed decision has been and gone and so too has the CPI number. So there is not much on the data or earnings front to shift the needle either way. Next week will be all flow and sentiment-related. This rally should extend if it indeed is a rally. $430 and $440 are the key resistance levels. $440 will be tough to break. Above $400 we feel there is a chance but need the SPY to hold this level on Monday to consolidate Friday's gains. So let's narrow it down. Close above $400 on Friday, hold those gains on Monday and we think indeed the rally to $430 and even $440 is on the cards. That's a classic sharp 10% bear market rally. That should get...

Elevated inflation readings and stock market turmoil continue to inflict pain on investors. Some are hoping for a quick turnaround. Others are just looking for a place to hide.  Unfortunately, there have been virtually no safe havens from the broad-based carnage outside of the energy sector and gold.  Gold has been one of the best performing assets this year by virtue of holding up better than stocks, bonds, and cryptos. But the yellow metal came under some heavy selling pressure in futures markets this week.  Metals markets seem to be trading more in line with economic slowdown fears and margin calls on Wall Street than with inflation. That will likely change when the recent spate of panic selling subsidies. But volatility is sure to persist. In a stagflationary environment, markets can plunge when stagnation fears predominate and just as dramatically snap back due to inflation pressures. Gasoline prices hit another new high this week while food shortage fears continue to drive higher grocery costs.  Wednesday’s Consumer Price Index report showed the rate of cost increases falling slightly in April from the previous month’s reading. But the CPI still came in at a higher than expected 8.3%. A CBS News report noted that supply issues will continue to persist even as Federal Reserve rate hikes force consumers and businesses to cut back on spending. CBS News Anchor: The pace of inflation slightly dropped for the first time in months, the Labor Department says the Consumer Price Index rose 8.3% in April from a year ago, that is actually down 0.2% from March. CBS News Reporter: But the President blamed the war in Ukraine for tightening grain supplies, driving up global food prices. President Joe Biden: Putin's war has cut off critical sources of food. CBS News Reporter: In the grocery store prices for meats, poultry, fish, and eggs are up more than 14% from a year ago. Citrus fruit, almost 19%. Market Commentator: A lot of this inflation that we're experiencing is rooted on the supply side, rather than the demand side. The Federal Reserve raising interest rates to slow the economy, that'll address the demand side, but it won't fix the supply chain, it won't broker peace in Eastern Europe and it won't open the ports in China. CBS News Reporter: And until we see some movement on those fronts, the high prices will likely continue. Many economists are now predicting that this high inflation will be with us into next year. Rising gasoline prices don’t hit the typical family’s budget as hard as higher housing and healthcare costs do. But high gas prices are a huge political liability for the party in power. Joe Biden and the Democrats are scrambling to deflect blame and offer up price relief gimmicks to voters. The political posturing likely won’t work. Even with the release of strategic reserves, oil will remain under-supplied for months to come. And the Biden administration’s cancellation of new oil and gas drilling leases will suppress domestic output for years to come.  Perhaps the administration sees demand reduction as some sort of solution. Locking down the country again because of a new virus variant would do the trick. It’s also possible that Fed rate hikes will drive the economy into a deep recession that causes demand to plummet.  But it’s hard to imagine either of those scenarios boosting the fortunes of Democrats this fall.  Current polling suggests the political landscape could shift dramatically in favor of Republicans after November’s mid-term elections. That has huge implications for investors in general and possibly for precious metals holders in particular. On Tuesday, a Republican primary battle in West Virginia pitted two incumbents fighting over a newly redrawn Congressional district. One candidate had the backing of establishment forces, including the state’s Democrat Senator Joe Manchin. The other had the support of Donald Trump and grassroots activists, including sound money proponents.  In the end, West Virginian Republicans delivered an overwhelming victory to the pro-sound money candidate, Alex Mooney. Representative Mooney is one of the leading voices in Congress for auditing the Federal Reserve and restraining its powers.  He has called on Treasury Secretary Janet Yellen to come clean about the government’s ongoing interventions in the gold market. And he has put forth legislation that would repeal discriminatory capital gains taxes on gold and silver bullion as well as require a full audit of U.S. gold reserves. Congressman Mooney will obviously need a lot more allies in Congress – and ultimately a more freedom-oriented White House – to get these sound money reforms enacted. But with millions of voters angry about inflation, smart politicians will acknowledge the source of the problem and propose real solutions to it.  At the root of the inflation problem is excessive government spending that drives excess currency creation by the...

In this week’s Live from the Vault, Andrew Maguire is joined by Patrick Karim, co-founder of technical analysis service, Northstar & Badcharts, to share bullish predictions for gold and silver, founded on a lifetime of accurately forecasting rallies.  The veteran chart trader analyses the breakout trend for gold and dissects the cyclical explosiveness of physical silver, indicating the historic opportunity for silver stackers everywhere.