2024-07-19 10:29

Japan’s government lowered this year’s growth estimates. A Reuters poll on Friday revealed that the BoJ will forego a hike in July. Japan’s core inflation accelerated in June. The USD/JPY price analysis is slightly bullish as the yen retreats from its recent highs amid signs the BoJ might not hike interest rates in July. Meanwhile, the dollar was steady despite poor US data. The yen has pulled back from its Wednesday highs after a series of interventions by the Bank of Japan to support the currency. However, the focus is now on monetary policy outlooks in the US and Japan. Notably, Japan’s government lowered this year’s growth estimates. This comes from the recent drop in demand amid higher import costs from a weak yen. The government cut growth from 1.3% to 0.9%. A weak economy complicates Japan’s outlook for rate hikes, as higher borrowing costs could further hurt the economy. Meanwhile, a Reuters poll on Friday revealed that the BoJ will forego a hike in July to support weak economic demand. This is bearish for the yen as the rate gap between Japan and the US will remain longer. However, economists also believe the central bank will scale back bond purchases. At the same time, most project the next rate hike in October. There was some positive news for the yen as Japan’s core inflation accelerated in June, keeping hopes for a hike alive. The country’s core CPI rose 2.6%, slightly below forecasts of a 2.7% gain. Still, it was better than the 2.5% increase reported in May. On the other hand, the US dollar was steady despite data showing weakness in the US labor market. Unemployment claims rose to 243,000, beating forecasts for 230,000. USD/JPY key events today Investors do not expect high-impact reports from the US or Japan today, meaning the pair might consolidate. USD/JPY technical price analysis: Price retests 30-SMA after bullish RSI divergence On the technical side, the USD/JPY price has pulled back after reaching the 156.00 key support level. It has found solid resistance at the 30-SMA. Notably, the price is in a developed downtrend with consistent lower highs and lows. However, the RSI is making higher lows, indicating a bullish divergence with the price. Therefore, there is a chance that bulls will break above the 30-SMA to retest the 159.00 resistance. However, if bears are still in control, the price will make a lower low below 156.00. https://www.forexcrunch.com/blog/2024/07/19/usd-jpy-price-analysis-bojs-uncertainty-weighs-on-yen/

2024-07-19 08:48

The ECB did not provide clear guidance on the outlook for rate cuts. Economists believe two more rate cuts will be in the Eurozone this year. US unemployment claims jumped to 243,000 in the last week. The EUR/USD outlook points south as the euro falls after an ambiguous European Central Bank meeting. Meanwhile, the dollar recovered slightly after mixed economic data from the US in the previous session. On Thursday, the ECB maintained rates but did not provide clear guidance on the outlook for rate cuts in the year’s second half, saying inflation remains high. However, forecasts showed that the central bank expects inflation to continue declining. Furthermore, policymakers have lost the confidence they had before the June meeting. Initially, inflation in the Eurozone had been on a clear downtrend. As a result, the ECB committed to cut rates in June. However, as the meeting approached, it became clear that inflation had stalled. Therefore, although the central bank cut rates, some experts felt it was rushed. Others said the ECB only cut because it had committed to do it. Economists believe there will be two more rate cuts in the Eurozone in September and December. However, at the meeting on Thursday, the message was that September was open. This means the outlook will depend on incoming data. On the other hand, the dollar recovered from its lows on Thursday after a set of mixed economic reports. The unemployment claims jumped to 243,000 in the last week, beating forecasts for 230,000. Meanwhile, manufacturing activity in the US Atlantic region grew more than expected in July. EUR/USD key events today There will be no key reports from the Eurozone or the US today. As a result, investors will continue digesting yesterday’s ECB meeting. EUR/USD technical outlook: Bearish momentum targets 1.0840 support On the technical side, the EUR/USD price trades below the 30-SMA with the RSI under 50, showing a bearish trend. The shift in sentiment came after the RSI made a bearish divergence with the price. This was a sign that the previous bullish trend had reached a point where bulls were tired. As a result, bears took control with a break below the 30-SMA. At the moment, they are eyeing the 1.0840 support level. The price must now make lower lows and highs to confirm a bearish trend. Otherwise, the price might start consolidating or resume the bullish trend. https://www.forexcrunch.com/blog/2024/07/19/eur-usd-outlook-euro-slides-after-ecbs-uncertain-outlook/

2024-07-18 10:23

Data showed a higher-than-expected number of unemployment claims in the UK. Average UK weekly earnings minus bonuses grew by 5.7%. The pound has gained about 2.1% in 2024 against the dollar. The GBP/USD outlook is slightly bearish as the pound retreats from recent highs after downbeat employment figures. However, the bullish trend might continue since the dollar is weak amid an increase in Fed rate cut expectations. Data on Thursday showed a higher-than-expected number of unemployment claims in the UK in the previous month. The claimant count was 32,300, compared to estimates of 23,400. Still, this was a decline from the last reading of 51,900. If unemployment is higher than estimated, the economy performs poorer than expected. This could pressure the Bank of England to start lowering borrowing costs. However, separate employment figures revealed that average weekly earnings minus bonuses grew by 5.7%, meeting forecasts. Furthermore, data from the previous session showed that service inflation remained high at 5.7%. Therefore, market participants have lowered the chances that the BoE will cut rates in August from 50% to 40%. Notably, unlike other major currencies, the pound has remained resilient against the dollar this year. So far, it has gained about 2.1% in 2024 against the dollar. The recent rally came due to increased expectations for a Fed rate cut. Inflation in the US has maintained its downtrend, giving policymakers more confidence it will reach the target. As a result, investors are placing a 100% likelihood of a rate cut in September. This has pressured the dollar, allowing the pound to rally. Retail sales data tomorrow could shed more light on the UK economy. GBP/USD key events today US unemployment claims GBP/USD technical outlook: Price retreats to 30-SMA after bearish RSI divergence On the technical side, the GBP/USD price is in a bullish trend that recently made a new high. However, the price is currently pulling back and is nearing the 30-SMA support. Bulls made a solid attempt to push the price above the 1.3002 key level. However, as the price made a higher high, the RSI made a lower one, indicating weakness. Consequently, the price fell back below the key level. If bears are stronger, they might take over with a break below the 30-SMA. However, if the SMA holds firm, bulls might retest the 1.3002 level and break above to make a higher high. https://www.forexcrunch.com/blog/2024/07/18/gbp-usd-outlook-pound-slips-below-1-30-amid-poor-jobs-report/

2024-07-18 08:55

There was an unexpected jump in Australia’s employment in June. Investors raised the likelihood of an RBA rate hike in August from 12% to 20%. Investors are fully pricing in a rate cut at the Fed’s September meeting. The AUD/USD forecast remains bearish. However, the pair managed to recover slightly after a mixed Australian jobs report. This week, the currency’s downtrend persisted despite rising expectations of a Fed rate cut. Data on Thursday showed that Australia’s economy added 50,200 jobs in June, bigger than the forecast of 20,000. However, the unemployment rate also increased from 4.0% to 4.1%, giving a mixed picture of the labor market. Still, demand in Australia’s labor market remains robust. Consequently, after the report, investors raised the likelihood of an RBA rate hike in August from 12% to 20%. At the same time, markets expect the first rate cut well into next year. The next major report will be the Consumer Price Index later this month. Inflation might increase, which could push up bets for a rate hike. Meanwhile, the opposite is happening in the US, where policymakers are gaining confidence that inflation will reach the 2% target. At the same time, data on Tuesday revealed that the economy remains on solid ground, with retail sales beating forecasts. Therefore, the Fed might achieve a soft landing with inflation reaching the 2% target without a recession. Furthermore, investors are fully pricing in a rate cut at the Fed’s September meeting. The policy outlooks between Australia and the US are diverging. The Fed might start cutting soon while there is still a risk of a rate hike by the RBA. AUD/USD key events today US unemployment claims AUD/USD technical forecast: Bears struggle to find footing after reversal On the technical side, the AUD/USD price is in a downtrend, trading below the 30-SMA resistance. At the same time, the RSI sits slightly below 50, supporting bearish momentum. The trend recently reversed when bulls failed to reach the 0.6800 key level. Bears took control when the price broke below the 30-SMA and the bullish trendline. The sharp decline then paused to retest the trendline before continuing lower. However, bears have still not found their footing below the SMA. The price must now make lower lows and highs to confirm a bearish trend. Therefore, it might soon retest the 0.6700 key support level. https://www.forexcrunch.com/blog/2024/07/18/aud-usd-forecast-aussie-rises-marginally-on-mixed-jobs-data/

2024-07-17 10:33

The US consumer inflation report surprised to the downside. US retail sales beat forecasts at 0.0%. Price pressures in Canada eased from 2.9% to 2.7% in June. The USD/CAD forecast has turned bearish as the dollar resumes its decline due to higher expectations for the Fed’s September rate cut. Meanwhile, although the Canadian dollar is strengthening, investors are more convinced that the Bank of Canada will cut rates in July. The US dollar started falling last week after the consumer inflation report surprised to the downside. As a result, markets moved to fully price in the first US cut in September. At the same time, Powell sounded more confident about the decline in price pressures on Monday. As a result, recent upbeat economic figures have failed to trigger a significant rally in the dollar. Notably, data on Tuesday revealed that retail sales beat forecasts at 0.0%. Economists had expected weaker consumer spending, with sales at -0.3%. After the report, the dollar briefly rallied before resuming its downtrend, strengthening the loonie. Meanwhile, in Canada, inflation figures on Tuesday increased the chances of another Bank of Canada rate cut in July. Price pressures eased from 2.9% to 2.7% in June, weighing on the Canadian dollar. Furthermore, the figure was smaller than the forecast of 2.8%. After the report, investors increased the likelihood of a rate cut in July to 90%. This would be the second BoC rate cut to spur economic growth. Moreover, it would indicate strong confidence among policymakers that inflation will continue falling. USD/CAD key events today There won’t be any key events from Canada or the US. Consequently, the pair might consolidate. USD/CAD technical forecast: 0.618 Fib triggers pullback towards 30-SMA On the technical side, the USD/CAD price is retreating after a failed attempt to trade above the 0.618 Fib retracement level. However, the bullish bias remains intact since the price sits above the 30-SMA and the RSI exceeds 50. Consequently, the retreat might pause at the SMA line, which acts as support in a bullish trend. Sentiment will remain bullish as long as the price stays above the SMA. Therefore bulls might break above the Fib level to retest the 1.3750 resistance level. Meanwhile, a break below the SMA will signal a reversal that might revisit the 1.3600 support level. https://www.forexcrunch.com/blog/2024/07/17/usd-cad-forecast-dollar-tumbles-as-feds-sep-rate-cut-looms/

2024-07-17 10:32

Inflation in the UK remained at an annual rate of 2% in June. UK services inflation came in at 5.7%. US sales were unchanged in June, better than economist expectations for a 0.3% decline. The GBP/USD price analysis shows solid bullish sentiment as the pound rallies after a higher-than-expected reading on UK inflation. Meanwhile, the dollar retreated from Tuesday’s highs as the effects of an upbeat retail sales report wore off. Inflation in the UK remained at an annual rate of 2% in June, higher than expectations of a 1.9% increase. At the same time, services inflation came in at 5.7%, which was higher than the forecast of 5.6%. The upbeat figures might cause Bank of England policymakers to be more cautious. Moreover, the numbers lowered the likelihood of a rate cut in August, boosting the pound.Meanwhile, the US dollar fell after rallying on upbeat retail sales data in the previous session. Sales were unchanged in June, better than economist expectations for a 0.3% decline. The report showed that the economy was doing fairly well, and the risks of a recession were low. However, inflation is also in a downtrend, meaning the Fed is getting closer to its first rate cut. Last week’s soft inflation figures pushed investors to fully price in the first rate cut by September, putting significant downward pressure on the dollar. As long as inflation continues falling, policymakers will be confident enough to cut rates even if the economy remains resilient. However, if inflation pauses or spikes while the economy is strong, the Fed will delay rate cuts. GBP/USD key events today Neither the US nor the UK will release more key reports today. Therefore, investors will keep digesting Britain’s inflation figures. GBP/USD technical price analysis: Bulls breach 1.3000 barrier On the technical side, the GBP/USD price is breaking above the 1.3000 barrier with a solid bullish candle. However, it must close well above this level to confirm this break. Notably, the price has made consistent higher highs and lows, indicating a bullish trend. At the same time, it has respected the 30-SMA as support, trading above the line. However, the RSI tells a different story. The indicator has made a bearish divergence with the price, which might indicate fading bullish momentum. If the bulls are exhausted, they might fail to sustain a move above 1.3000 and pull back. https://www.forexcrunch.com/blog/2024/07/17/gbp-usd-price-analysis-pound-jumps-amid-hotter-inflation/