2024-07-23 09:56

China unexpectedly cut rates to spur economic growth. The economic situation in China remains bleak. This week, investors will focus on PMI, GDP and inflation data from the US. The AUD/USD price analysis shows massive bearish momentum as the Aussie suffers after unexpected rate cuts by the People’s Bank of China. Meanwhile, investors were gearing up for more inflation data from the US that will affect Fed rate cut expectations. On Monday, China unexpectedly cut rates to spur economic growth after data for the second quarter reflected poor economic performance. The last time the country made such a move was in August last year. The move led to a sharp decline in the Aussie, which reflects the Yuan. The economic situation in China remains bleak. The property crisis continues, and the country is verging on disinflation. Therefore, top officials met and decided the best move was to lower borrowing costs. Meanwhile, the Aussie has fallen since its rally on Thursday last week when Australia’s employment showed a jump in jobs. Since then, the currency has been vulnerable to dollar and yuan moves. Notably, the dollar recovered towards the end of the week amid safe-haven inflows. The unexpected cyber outage on Friday hurt risk sentiment, pushing the Aussie lower. On the other hand, the dollar rallied, ending a period of weakness caused by an increase in Fed rate cut expectations. This week, investors will focus on PMI, GDP, and inflation data from the US. On Friday, the focus will be on the core PCE price index, which might show a 0.2% increase. This forecast is bigger than the previous increase of 0.1%. A smaller-than-expected figure would confirm the downtrend in inflation. AUD/USD key events today No high-impact reports will come from Australia or the US today. Consequently, the price might extend Monday’s move. AUD/USD technical price analysis: Solid bearish momentum charges for 0.6600 support On the technical side, the AUD/USD price is in freefall and recently broke below the 0.6640 support level. The price has steeply declined since it broke below and retested its bullish trendline. The decline has been sharp, breaking below support levels with few shallow pauses. Consequently, the bearish bias is strong. The next target for this decline is at the 0.6600 support level. Here, the price might pause for a pullback before the downtrend continues. https://www.forexcrunch.com/blog/2024/07/23/aud-usd-price-analysis-sliding-after-pboc-rate-cut-surprise/

2024-07-23 08:38

Toshimitsu Motegi said the BoJ should be clear about rate hikes. Economists expect another quarter-point hike from the Bank of Japan. US President Joe Biden ended his campaigns for the November presidential election. The USD/JPY outlook remains bearish as the yen gains ahead of next week’s Bank of Japan and Fed policy meetings. Notably, there is more pressure on the BoJ to hike rates. At the same time, the Fed is nearing its first rate cut in September. On Monday, senior ruling party official Toshimitsu Motegi said the BoJ should be clear about rate hikes. He also said a weak yen was hurting the economy, so Japan’s central bank should start communicating plans to reduce its massive economic stimulus. Economists expect the Bank of Japan to hike interest rates another quarter-point. However, a consensus on the timing has yet to emerge. Still, policymakers might announce plans to reduce bond purchases at the next meeting. Furthermore, investors are optimistic about the looming Fed rate cut, which would reduce the rate gap between Japan and the US. Recent economic reports have led to a surge in expectations for a cut in September, significantly weakening the dollar. The next major report is the core PCE price index, due Friday. If price pressures continue easing, the dollar might weaken further. Since last week, the yen has been on the front foot after Japan’s government intervened to support the currency. The intervention coincided with the softer-than-expected US CPI report, boosting the yen. Elsewhere, currency markets remained calm after US President Joe Biden ended his campaigns for the November presidential election. Trump will now compete with Kamala Harris. However, there is still a higher likelihood that Trump will win. USD/JPY key events today There will be no key reports from Japan or the US today, so the pair might extend yesterday’s move. USD/JPY technical outlook: Bears remain in control after SMA retest On the technical side, the USD/JPY price is descending after revisiting the 30-SMA resistance. Bulls failed to break above the SMA, showing a strong bearish trend. This attempt came after the RSI made a bullish divergence. Although bears were exhausted, they were not ready to give up control at the 30-SMA. As a result, the price is falling. If it makes a lower low, it might retest the 155.01 level and confirm a continuation of the downtrend. Otherwise, bulls might retest the SMA. https://www.forexcrunch.com/blog/2024/07/23/usd-jpy-outlook-yen-soars-on-boj-meeting-anticipation/

2024-07-22 10:20

USD/CAD outlook is bullish as Canada’s retail sales fell by 0.8% in May. The BoC will likely cut rates by 25 basis points on Wednesday. A Trump win would further weaken the Loonie. The USD/CAD outlook shows bullish optimism as the Loonie falls amid rising expectations for a Bank of Canada rate cut in July. Meanwhile, the dollar was steady despite new developments in the US political scene. The Canadian dollar plunged last week after economic reports increased the likelihood of a second BoC rate cut in July. Notably, inflation eased more than expected, showing a drop in price pressures. At the same time, data on Friday showed that retail sales fell by 0.8% in May from April. This was a poorer outcome than the forecast of a 0.6% decline. The Bank of Canada became the first major central bank to lower borrowing costs. Notably, inflation was behaving, and the economy was declining. Therefore, policymakers were confident and under pressure to ease the burden of high rates on the economy. Since this trend has continued, the central bank will likely cut rates by 25 basis points on Wednesday. Lower rates in Canada will leave the Canadian dollar vulnerable. At the same time, US President Joe Biden dropped out of the presidential race on Sunday. Still, bets show there is a high chance Trump will win. Such an outcome would further weaken the Loonie. If Trump wins, he might increase tariffs on US imports. Notably, the US receives about 75% of Canada’s exports. Therefore, tariffs would significantly affect Canada’s economy. Elsewhere, the US dollar remained steady as investors awaited more clues on the Fed’s policy outlook. The next big event will be Friday’s release of the core PCE price index. USD/CAD key events today Neither Canada nor the US will release major reports. Therefore, the pair might consolidate. USD/CAD technical outlook: Bullish momentum revisits 1.3750 resistance On the technical side, the USD/CAD price is in a solid bullish trend, with the price well above the 30-SMA and the RSI near the overbought region. However, bulls are approaching strong resistance at the 1.3750 level. If they are strong, the price will breach this level to retest the 1.3800 key psychological level. On the other hand, if bulls fail to breach the resistance, the price will pull back to retest the 30-SMA or the 1.3675 support level. https://www.forexcrunch.com/blog/2024/07/22/usd-cad-outlook-bulls-gather-traction-ahead-of-boc/

2024-07-22 08:56

The UK released data showing sales fell by 1.2%. Markets have lowered the chances of a BoE cut in August due to still-high service inflation. Joe Biden announced on Sunday that he was no longer campaigning for the November election. The GBP/USD forecast leans bearish, with the pound hovering near Friday’s lows due to a disappointing UK retail sales report. Meanwhile, the dollar inched lower after US President Joe Biden announced on Sunday that he was dropping his re-election bid. The pound dropped on Friday after the UK released data showing sales fell by 1.2%, well above the expected drop of 0.4%. This was a significant decline from May, when sales rose 2.9%. Experts believe this decline came from cooler weather during the month, discouraging buyers from shopping. However, the outlook for Bank of England rate cuts remained mostly unchanged. Markets have lowered the chances of a cut in August due to still-high service inflation. Consequently, the BoE might still be among the last major central banks to cut rates. Meanwhile, the dollar fell slightly as markets absorbed the latest development in the US presidential race. Joe Biden announced on Sunday that he was no longer running for the seat. At the same time, investors focused on the outlook for Fed rate cuts after fully pricing in a rate cut in September. There is a slight chance the Fed will cut in July. The next major report is the core PCE price index, which will come on Friday. This will give further insight into the state of inflation. GBP/USD key events today The pair will start the week slowly, as no key reports will come on Monday or Tuesday. GBP/USD technical forecast: Bears halt at 1.2900 support On the technical side, the GBP/USD price has paused near the 1.2900 key support level after breaking below the 30-SMA. With the price now under the SMA, the bias is bearish. Furthermore, the RSI trades below 50 in bearish territory. The reversal came after bullish momentum faded near the 1.3050 resistance level. Bears then took charge by pushing the price below the SMA. However, GBP/USD must start making lower highs and lows to confirm a bearish trend. The next move might be to the 30-SMA resistance. If it holds firm, the price could break below 1.2900 to retest the 1.2800 support. https://www.forexcrunch.com/blog/2024/07/22/gbp-usd-forecast-pound-weakened-on-dismal-retail-sales/

2024-07-21 10:04

Powell indicated that policymakers were more confident about lowering inflation. The US reported better-than-expected sales for June. The ECB held rates but failed to give clear guidance on the future. The EUR/USD weekly forecast is bullish as Fed policymakers gain confidence inflation will reach the target, weakening the dollar. Ups and downs of EUR/USD The EUR/USD pair had a bearish week. However, during the week, prices reached new highs as the dollar fell. Notably, the dollar was weak at the start of the week, as Powell indicated that policymakers were more confident about lowering inflation. As a result, investors got more confident that the Fed would cut rates in September. This pushed the dollar down, allowing the euro to rally. Furthermore, although the US reported better-than-expected sales for June, the dollar continued falling. However, the trend shifted towards the end of the week as the euro plunged after the ECB policy meeting. The central bank held rates but failed to give clear guidance on the future, saying it would depend on data. This created uncertainty about the rate cut outlook, weighing on the euro. Next week’s key events for EUR/USD Next week, investors will focus on data from the US, including the gross domestic product and durable goods. These reports will continue shaping the outlook for Fed rate cuts. Notably, markets are fully pricing in a rate cut in September. The last GDP report showed an expansion of 1.4%, slightly better than estimates. However, it was well below previous readings, indicating weaker economic activity. Further economic deterioration will put pressure on the Fed to lower borrowing costs. The durable goods orders will also show the state of demand that will influence the outlook for rate cuts. EUR/USD weekly technical forecast: Price retraces after hitting channel resistance On the technical side, the EUR/USD price is pulling back after reaching its channel resistance. Moreover, it has confirmed the shallow bullish trend by making a higher high. Currently, the price sits above the 22-SMA, showing bulls are in the lead. At the same time, the RSI sits above 50, showing solid bullish momentum. However, since the price trades in a shallow trend, bears are nearly as strong as bulls. Therefore, the price might continue falling next week, past the 22-SMA support to retest the channel support level. The bullish bias will remain if the price continues making higher highs and lows. https://www.forexcrunch.com/blog/2024/07/21/eur-usd-weekly-forecast-fed-confident-in-taming-inflation/

2024-07-20 19:19

Data on Tuesday showed upbeat US retail sales, indicating resilience. Canada’s inflation eased more than expected, boosting bets for a July rate cut. The Bank of Canada will likely cut rates next week. The USD/CAD weekly forecast paints a strong bullish picture as the Canadian dollar plummets amid poor data and a looming BoC rate cut. Ups and downs of USD/CAD The USD/CAD pair had a bullish week as the US dollar soared against a weak Canadian dollar. Although the dollar was weak in the broader market, the loonie was weaker. Data on Tuesday showed upbeat US retail sales, indicating resilience. Meanwhile, inflation eased more than expected in Canada, boosting bets for a July rate cut. To make matters worse, Canada reported dismal sales on Friday, well below expectations. This clearly showed that the economy is falling apart due to high rates. Consequently, the Bank of Canada has every reason to lower borrowing costs. Next week’s key events for USD/CAD Investors will focus on the Bank of Canada policy meeting next week. Meanwhile, reports on GDP and durable goods in the US will be released. The Bank of Canada will likely cut rates next week after inflation eased further in June. The chances of a cut in July rose sharply after data this week showed that inflation in Canada increased by a smaller-than-expected 2.7%. This came after a jump of 2.9% in May. At the same time, economists expect the central bank to cut twice more in 2024. Meanwhile, US GDP data will show the state of the economy. However, unless a big surprise exists, it might not change the outlook for a cut in September. USD/CAD weekly technical forecast: Bulls charge for range resistance level On the technical side, the USD/CAD price trades above the 22-SMA, with the RSI rising above 50, showing that bulls are in control. However, the price has been trading sideways, chopping through the SMA. Therefore, bears and bulls are equally matched, and the market has no clear direction. Notably, the price has stayed in a range between the 1.3600 support and the 1.3750 resistance. Therefore, the price must break out of this area to start trending. Since bulls are in charge, the price might challenge the range resistance. A break above would allow the price to revisit the 1.3900 key level. However, if the price fails to break above, it might continue consolidating. https://www.forexcrunch.com/blog/2024/07/20/usd-cad-weekly-forecast-buyers-emerge-amid-bocs-rate-cut/