2024-07-16 10:09
A Bank of Canada survey showed increased expectations for lower inflation. Investors raised the chances of a July BoC rate cut from 77% to 80%. In June, economists expect inflation in Canada to ease from 2.9% to 2.8%. The USD/CAD price analysis reveals a bullish trend as the Canadian dollar weakens amid increased chances of another Bank of Canada rate cut this month. Meanwhile, the dollar fluctuated amid increased bets for a September Fed rate cut and a higher likelihood of a Trump win. On Monday, the Canadian dollar plunged after a Bank of Canada survey that showed increased expectations for lower inflation in Canada. Businesses in the country expect a slowdown in input and selling prices. This means that inflation might continue falling. As a result, investors raised the chances of a July rate cut from 77% to 80%. However, this outlook might change significantly with Tuesday’s inflation report. The last report showed a spike in inflation that led to a decline in BoC rate cut expectations. In June, economists expect the figures to ease from 2.9% to 2.8%. A bigger-than-expected decline would increase the chances of a cut this month. On the other hand, if there is another spike, the Bank of Canada might maintain rates this month, propelling the Canadian dollar higher. Meanwhile, the dollar initially rose on Monday as Trump’s assassination attempt raised the chances he would win November’s election. A Trump win would benefit the dollar. However, the move reversed when Powell spoke, indicating increasing confidence that inflation will reach the 2% target. As a result, markets moved to fully price in a rate cut in September. USD/CAD key events today Canada Consumer Price Index US retail sales report USD/CAD technical price analysis: Bullish momentum pauses at 0.618 Fib On the technical side, the USD/CAD price has met solid resistance at the 0.618 Fib retracement level. Bulls have been in control since they took over at the 1.3600 key level. However, the price has risen well above the 30-SMA and might need to pull back before continuing higher. If the Fib level holds strong, the price might pause or revisit the SMA. If the price remains above the SMA, the bullish trend will continue. A break above the Fib level would allow the price to reach the 1.3750 resistance level. https://www.forexcrunch.com/blog/2024/07/16/usd-cad-price-analysis-bulls-gain-traction-ahead-of-boc/
2024-07-16 08:45
Powell noted that recent inflation figures had increased confidence that price pressures were declining. Markets are fully pricing in a Fed rate cut in September. Investors are preparing for the ECB policy meeting on Thursday. The EUR/USD outlook paints a bullish picture, with the dollar weak after Powell’s dovish comments. Meanwhile, investors are gearing up for the US retail sales report later in the day. Furthermore, anticipation is building ahead of Thursday’s European Central Bank policy meeting. On Monday, Powell noted that recent inflation figures had increased confidence that price pressures were declining in a sustainable way. Consequently, inflation could soon reach the central bank’s 2% target. More confidence among policymakers paves the way for rate cuts. As a result, after Powell’s comments, markets are fully pricing in a rate cut in September. Moreover, investors expect the Fed to cut by 68 basis points this year. However, this outlook might change as more data comes in since there is still a long way to go before September. Investors will focus on the US retail sales report, which might show a 0.3% monthly decline. Weaker sales would point to declining consumer spending, strengthening the case for rate cuts. Meanwhile, investors are preparing for the ECB policy meeting on Thursday, where the central bank will likely hold rates. However, traders will focus on Christine Lagarde’s comments for clues on future rate cuts. Since the last meeting, inflation has eased. However, policymakers are concerned about services inflation which remains high. Last week, a Reuters poll revealed that the ECB might cut rates in September and December. However, there is a chance the central bank will cut once. EUR/USD key events today US core retail sales m/m US retail sales m/m EUR/USD technical outlook: Bearish RSI divergence On the technical side, the EUR/USD price has paused near the 1.0900 key resistance level after a robust bullish surge. The 30-SMA trades well below the price, showing a bullish trend. At the same time, the RSI is in bullish territory above 50. However, as the price made higher highs near 1.0900, the RSI made lower highs, indicating a bearish divergence. If the divergence plays out, the price will likely pull back to retest the 30-SMA or lower. A break below the SMA would confirm a shift in sentiment. However, if bulls remain in control, the price could reach 1.0950. https://www.forexcrunch.com/blog/2024/07/16/eur-usd-outlook-dollar-dips-as-powell-strikes-dovish-tone/
2024-07-15 10:31
The UK economy grew faster than expected in May. BoE’s Swati Dhingra called for the central bank to start lowering borrowing costs. The likelihood of a Fed rate cut in September rose from 73% to 94%. The GBP/USD outlook leans bullish as the pound extends last week’s rally after positive UK data. Meanwhile, the dollar remained weak after the US inflation report showed the first decline in four years. Data on Thursday last week showed that the UK economy grew faster than expected in May. As a result, there was less confidence in a Bank of England rate cut in August. This propelled the pound higher. However, rate-setter Swati Dhingra on Monday called for the central bank to start lowering borrowing costs. According to her, high interest rates have lowered demand in the economy, so there is little risk of a spike in inflation. However, markets barely reacted as she is a known dove. Notably, Swati has voted for a rate cut in the UK since February. Currently, there is a 50% chance that the BoE will cut rates in August. Meanwhile, the dollar had a brief recovery on Monday as investors digested news of an attempt at Trump’s life. The incident increased the chances that Trump will win the election in November. A Trump win is bullish for the dollar as Treasuries might increase, boosting demand for the US currency. However, the move soon reversed as the market focused on the outlook for Fed rate cuts. Data on Thursday showed that inflation fell by 0.1% on a monthly basis. This was an unexpected decline and a big milestone for the US central bank. The softer figures led to a surge in the likelihood of a rate cut in September from 73% to 94%. GBP/USD key events today Empire State Manufacturing Index Fed Chair Powell Speaks GBP/USD technical outlook: RSI points to slight weakness in the new high On the technical side, the GBP/USD price is approaching the 1.3000 key psychological level that might be a strong barrier. The bullish bias is strong, with the price far over the 30-SMA support. At the same time, the RSI supports solid bullish momentum in the overbought region. However, the RSI also shows slight easing in bullish momentum from the previous high. The bearish divergence shows exhaustion. If bulls are not strong enough to breach the 1.3000 resistance, the price might pull back to retest the 1.2900 support or the 30-SMA. https://www.forexcrunch.com/blog/2024/07/15/gbp-usd-outlook-pound-advances-further-on-upbeat-uk-data/
2024-07-15 08:33
The dollar recovered briefly on Monday after Trump’s assassination attempt. US inflation unexpectedly fell for the first time in June. Data on Friday revealed that inflation expectations in Japan have risen. The USD/JPY forecast is pessimistic as the yen remains close to a four-week peak following indications that the Bank of Japan intervened in the markets on Thursday. Meanwhile, the dollar recovered briefly on Monday as Trump’s assassination attempt raised the chances of his victory. The dollar edged higher as the likelihood of a Trump win increased after an attempt at his life. A Trump win would mean higher tariffs and looser fiscal policy. Moreover, the earnings outlook could improve. However, this was not enough to reverse last week’s moves after the US consumer inflation report. Inflation unexpectedly fell for the first time in June, surprising economists who had expected a slight increase. The annual figure also moved closer to the US central bank’s target, increasing by a smaller-than-expected 3.0%. Consequently, there was an increase in Fed rate cut expectations. The likelihood of a cut in September rose to 94% from 73%. Furthermore, the yen surged after the CPI report, with data on Friday showing that the Bank of Japan intervened in the markets. Notably, the BoJ used over 3.37 trillion yen to buy the currency on Thursday. However, top officials kept quiet about the intervention. Elsewhere, data on Friday revealed that inflation expectations in Japan have risen. 90% of households expect an increase in prices a year from now. This could encourage the Bank of Japan to continue hiking interest rates. The prospect of cuts by the Fed and hikes by the BoJ benefit the yen. USD/JPY key events today Empire State Manufacturing Index Fed Chair Powell Speaks USD/JPY technical forecast: Solid bearish momentum weakens 158.01 barrier On the technical side, the USD/JPY price trades well below the 30-SMA, indicating a steep bearish move. Bears took control with a solid bear candle that broke below the 30-SMA and the 160.50 key level. The decline paused at the 158.01 support level. Here, bulls emerged but were not strong enough to retest the 30-SMA. As a result, bears are on the verge of breaking below 158.01. If they succeed, the next hurdle will be at the 156.01 level. On the other hand, if they fail, the price will likely climb to retest the 30-SMA before the downtrend continues. https://www.forexcrunch.com/blog/2024/07/15/usd-jpy-forecast-boj-intervention-leads-to-4-week-lows/
2024-07-14 08:46
Fed Chair Powell said policymakers needed more confidence inflation was falling. US inflation fell for the first time in four year in June. Investors pushed up chances for a September rate cut to 93%. The EUR/USD weekly forecast is bullish as the dollar falls after a softer-than-expected US inflation report. Ups and downs of EUR/USD The euro had a bullish week where the dollar ended lower amid an increase in Fed rate cut expectations. At the same time, there was relief as the cloud of political uncertainty in France lifted after the last round of elections. During the week, Fed Chair Powell spoke with a cautious tone, saying policymakers needed more confidence inflation was falling. As a result, the dollar strengthened. However, this move reversed when the US consumer inflation report came out. Inflation fell for the first time in four year in June. This surprised economists who had expected it to increase. As a result, investors pushed up chances for a September rate cut to 93%. Meanwhile, wholesale inflation accelerated in June. Next week’s key events for EUR/USD Next week’s calendar for EUR/USD will be light with the ECB bank lending survey and the US retail sales report. After a week of heavy inflation data, markets will just focus on the state of consumer spending in the US. The recent trend has been poor economic figures showing weakness in the economy. Therefore, there is a high chance this will continue. A decline in retail sales will pile more pressure on the Fed to start lowering interest rates. On the other hand, if the report beats estimates, it could lead to a decline in Fed rate cut expectations. Still, it would be one positive report after a series of poor ones. EUR/USD weekly technical forecast: Bulls prepare to break the 1.0900 resistance On the technical side, the EUR/USD price has reached the 1.0900 key resistance level after a strong bullish move. This has put the price well above the 22-SMA supporting a bullish bias. At the same time, the RSI is quickly approaching the overbought region, showing a surge in bullish momentum. In the coming week, there is a high chance the price will break above 1.0900 to make a higher high. This would confirm a new bullish trend after the first higher low near the 1.0700 key level. Moreover, it would clear the path for a rally to the 1.618 Fib extension level. https://www.forexcrunch.com/blog/2024/07/14/eur-usd-weekly-forecast-us-dollar-slips-on-low-inflation/
2024-07-13 08:46
Powell noted that inflation was on a downtrend. US consumer inflation data showed a bigger-than-expected easing in price pressures. US wholesale inflation figures came in higher than expected. The USD/CAD weekly forecast is bearish as easing US inflation has raised the likelihood of a September Fed cut. Ups and downs of USD/CAD The USD/CAD pair had a slightly bearish week but closed well above its lows. During the week, investors focused on Powell’s testimony and US inflation data. Although Powell was cautious, he noted that inflation was on a downtrend. After his speech, consumer inflation data showed a bigger-than-expected easing in price pressures. This led to a surge in Fed rate cut expectations which weighed heavily on the dollar. However as the week ended, US wholesale inflation figures came in higher-than-expected, allowing the dollar to recover slightly. Next week’s key events for USD/CAD Next week, the US will only release a retail sales report. Meanwhile, Canada will release inflation and retail sales figures. The US retail sales report will add to the recent reports that have shaped the Fed’s rate cut outlook. This week, the likelihood of a September cut rose to 93% after the consumer inflation report. Consequently, if retail sales ease, there will be more certainty about a rate cut in September. Meanwhile, Canada’s inflation report will impact BoC rate cut bets. Last month, inflation in Canada unexpectedly accelerated, leading to a drop in bets for a cut in July. If inflation spikes again, Canada’s central bank might not cut in July. However, if it eases, chances of a cut will go up. USD/CAD weekly technical forecast: Bears face the 1.3601 support On the technical side, the USD/CAD price is challenging the 1.3601 key support level. The bias is bearish because the price trades below the 22-SMA with the RSI below 50 in bearish territory. However, after the previous bullish move, the price has been caught in a sideways move between the 1.3601 support and the 1.3800 resistance. This consolidation could be a pause in the previous bullish trend or the start of a reversal. The price must break below the 0.382 Fib retracement level and the 1.3601 support to confirm a reversal. On the other hand, if this is just a pause, the 1.3601 support might hold firm, allowing bulls to retest and possibly break above 1.3800. https://www.forexcrunch.com/blog/2024/07/13/usd-cad-weekly-forecast-cooling-inflation-prompting-cut-in-sep/
