2024-07-10 08:52

Powell said the Fed needs greater confidence that inflation will reach its target. Investors lowered the chances of a Fed rate cut from 76% to 73%. Australia’s index for business conditions fell by two points in June. The AUD/USD price analysis reveals a positive outlook, spurred by the dollar’s decline after Powell’s cautious comments in his latest speech. Meanwhile, the Aussie remained steady after data revealed worsening business conditions in June. After the US jobs report last week, investors were eagerly awaiting Powell’s speech to see whether policymakers were gaining confidence to cut rates. However, when he spoke, he maintained that the Fed needs greater confidence that inflation will reach its target. Only then can policymakers be ready to implement a rate cut. Still, Powell noted that the risk of a deterioration in the labor market was growing. Therefore, the central bank has to balance inflation with growth. After his speech, market participants lowered the chances of a rate cut from 76% to 73%. According to experts, Powell and other policymakers will likely maintain their cautious tone because there are still several economic reports to come before the September meeting. Notably, the US will release three more inflation reports and two employment reports. On Thursday, investors will watch the US consumer inflation report to see the state of price pressures. Further easing will increase confidence in a September cut. On the other hand, data from Australia on Tuesday showed that the index for business conditions fell by two points in June. However, business confidence rose by six points, showing firms were confident about the future. The Reserve Bank of Australia might be the last major central bank to implement rate cuts. Therefore, high borrowing costs will likely continue hurting businesses for longer. AUD/USD key events today Fed Chair Powell Testifies AUD/USD technical price analysis: Exhausted bulls face the 0.6750 hurdle On the technical side, the AUD/USD price trades near the 0.6750 key resistance level. It is above the 30-SMA and the RSI trades in bullish territory, supporting a bullish bias. Bulls recently broke above the 0.6700 major resistance level with a strong candle. However, the bullish move has weakened near 0.6750. Therefore, bulls need a new surge in momentum to make a higher high and continue the uptrend. If they fail, the price will likely break below the 30-SMA and move to revisit the 0.6700 support level. https://www.forexcrunch.com/blog/2024/07/10/aud-usd-price-analysis-powells-cautious-remarks-weaken-usd/

2024-07-09 10:30

The yen has rebounded since last week, when it reached a 38-year low. Investors are speculating on a July BoJ hike. There is a 76% chance that the Fed will lower borrowing costs in September. The USD/JPY price analysis shows a slightly bearish trend, with the yen holding steady after rebounding from a 38-year low. Simultaneously, the dollar made a modest recovery on Tuesday, just in time for Fed Chair Powell’s upcoming testimony. The yen has rebounded since last week, when it reached its lowest level in 38 years. The rebound came amid fears of intervention. At the same time, there was more pressure on the Bank of Japan to hike interest rates. The weak yen has led to an increase in import costs, which is driving inflation higher. The recent plunge increased bets that the BoJ would be ready to hike interest rates in July. Market participants also expect the central bank to announce plans to reduce its bond purchases. Therefore, the July meeting could benefit the yen. On the other hand, the greenback recovered on Tuesday as investors looked forward to more clues about the Fed’s rate cut outlook. Powell is set to speak later in the day. His last speech was slightly dovish, as he acknowledged that inflation was declining and said it would pave the way for rate cuts. After last week’s jobs report, there is a higher 76% chance that the Fed will lower borrowing costs in September. The economy added fewer jobs in June, and the unemployment rate rose. Investors will now watch the upcoming consumer inflation figures to see whether the downtrend in inflation is consistent. If it is, the likelihood of a cut in September will increase. USD/JPY key events today Fed Chair Powell’s speech USD/JPY technical price analysis: Price retests 30-SMA after bearish break On the technical side, the USD/JPY price has broken below the 30-SMA and is currently retesting it as resistance. The break below the SMA indicated a shift in sentiment to bearish. At the same time, the RSI showed a shift to solid bearish momentum when it broke below 50. Therefore, if the SMA holds firm as resistance, the price will fall to make a lower low. As a result, it might break below the 160.00 support level. This would pave the way for a retest of the 158.00 support level. On the other hand, if the price goes back above the SMA, it would retest the 162. 01 resistance or continue higher. https://www.forexcrunch.com/blog/2024/07/09/usd-jpy-price-analysis-yen-finds-stability-following-historic-low/

2024-07-09 09:08

Canada’s unemployment rate rose to an over 2-year high of 6.4%. Chances of a BoC cut in July rose from 40% to 56%. Investors await Powell’s speech to see where policymakers stand regarding rate cuts. The USD/CAD outlook is slightly bullish as the Canadian dollar remains weak after last week’s dismal jobs report. Meanwhile, investors are gearing up for Powell’s testimony, which might contain clues about the Fed’s policy outlook. The Canadian dollar fell sharply on Friday after Canada’s unemployment rate rose to an over 2-year high of 6.4%. This was a sign that more people were losing jobs. At the same time, the economy lost 1,400 jobs in June. Meanwhile, analysts had expected an increase of 22,500 jobs. Economists worry that the poor jobs report could indicate a recession, pushing the Bank of Canada to cut interest rates. After the report, chances of a BoC cut in July rose from 40% to 56%. On the other hand, the dollar was also fragile after Friday’s employment figures. Although not as bad as Canada’s, the US labor market has also softened. The unemployment rate rose from 4.0% to 4.1%, raising the likelihood of a Fed cut in September to 76%. Investors are awaiting Powell’s speech to see where policymakers stand regarding rate cuts. A dovish speech could increase bets for a September cut. However, the Fed chair might emphasize the need for more evidence, especially with the upcoming inflation report. If price pressures ease, policymakers will be more confident that inflation will reach the central bank’s target. Therefore, they might assume a more dovish tone. USD/CAD key events today Fed Chair Powell Testifies USD/CAD technical outlook: Bulls face solid resistance barrier On the technical side, the USD/CAD price has risen to the 30-SMA resistance after revisiting its bearish channel support. Moreover, the bias is still bearish, with the price below the SMA and the RSI slightly under 50. Bulls are currently challenging the 30-SMA resistance. If the price breaks above the SMA, it will meet the 1.3650 key resistance level. A break above this would allow USD/CAD to revisit its channel resistance line. However, if bulls are not strong enough to push the price above the current resistance zone, it will likely fall back to the channel support and the 1.3600 key level. https://www.forexcrunch.com/blog/2024/07/09/usd-cad-outlook-weak-jobs-data-keeps-cad-under-pressure/

2024-07-08 10:18

Pound bulls cheered a Labour Party win last Thursday. The new UK finance minister, Rachel Reeves, will speak on Monday. The US will release consumer and producer inflation figures this week. The GBP/USD outlook is bullish as the pound extends its rally after the Labour Party won last week’s UK elections. Meanwhile, the dollar remains frail ahead of inflation and after the US nonfarm payrolls report showed weaker demand in the labor market. Pound bulls cheered a Labour Party win last Thursday due to a brighter outlook for the UK economy. The new finance minister, Rachel Reeves, will speak on Monday and might reveal plans to improve economic growth in the UK. Furthermore, the end of the elections brought relief as it removed the cloud of political uncertainty in the country. The pound is still the best performer against the dollar this year among major currencies. There is a 63% chance that the Bank of England will cut rates at the August meeting. Notably, the UK’s inflation has eased while the economy remains solid. Investors will now pay attention to BoE policymakers who have remained silent since the election was announced. The first speaker on Monday will be MPC member Jonathan Haskel. On the other hand, the US will release consumer and producer inflation figures this week. Economists expect the annual figure to ease from 3.3% to 3.1%. If this happens, market participants will raise the likelihood of a Fed cut in September. At the moment, there is a 76% chance of a cut in September. This came after Friday’s employment figures showed an unexpected increase in the unemployment rate. At the same time, average hourly earnings eased. A slowdown in the economy accompanied by softer inflation could prompt the Fed to lower borrowing costs soon. GBP/USD key events today No key UK or US events are scheduled today, so the pair may consolidate. GBP/USD technical outlook: Bulls eying 1.2850 resistance in a solid rally On the technical side, the GBP/USD price is on a strong bullish rally that has broken above the 1.2800 resistance level. Moreover, the price sits well above the 30-SMA, showing a steep rally. Meanwhile, the RSI, which trades above 70 in the overbought region, supports solid bullish momentum. The next barrier is at the 1.2850 level. After such a steep rally, the price might pause here. A pause or a pullback would allow the 30-SMA to catch up before the trend continues. https://www.forexcrunch.com/blog/2024/07/08/gbp-usd-outlook-labour-party-victory-fuels-pound-rally/

2024-07-08 09:09

The US added 206,000 jobs in June, slightly higher than the forecasted 191,000 jobs. Investors raised bets for a Fed cut in September to 76%. Renewed political uncertainty in the Eurozone initially weighed on the euro. The EUR/USD forecast supports bullish sentiment. The dollar was vulnerable after a 1% loss last week on downbeat data. Meanwhile, the euro recovered after dropping due to an unexpected outcome in the last round of French elections. The dollar fell last week as economic figures revealed a slowdown in the US economy. The primary catalyst was the nonfarm payroll report, which showed weakness in the labor market. The report revealed that the US added 206,000 jobs in June, slightly higher than the forecasted 191,000 jobs. Meanwhile, average hourly earnings eased from 0.4% to 0.3%. The unemployment rate rose from 4.0% to 4.1%, indicating deterioration in the sector. Consequently, investors raised bets for a Fed cut in September to 76%. This continued economic decline might push Fed policymakers to assume a more dovish stance. However, before that, they might wait to see this week’s inflation figures. More softer-than-expected data will likely pave the way for lower borrowing costs in the US. However, if the figures show persistent price pressures, policymakers might maintain their cautious stance. Meanwhile, renewed political uncertainty in the Eurozone initially weighed on the euro. The leftist alliance won the election, but there was no majority win. Therefore, this created a hung parliament, making it difficult to pass any policies, especially if the different groups couldn’t work together. The results were also surprising, as polls had shown that the National Rally would win. However, the party came third. EUR/USD key events today It might be a slow day in the market as neither the US nor the Eurozone will release significant economic reports. EUR/USD technical forecast: Bulls approach strong barrier at 1.0850 On the technical side, the EUR/USD price is approaching the 1.0850 resistance level. Bulls have been in the lead since the price broke above the 1.0750 resistance level. As a result, the price has stayed above the 30-SMA with the RSI near the overbought region. However, the rally might soon pause if the 1.0850 resistance holds firm. A pause could allow the price to retest the 30-SMA support before it continues higher or breaks below. A break above the 1.0850 resistance would indicate a strong bullish bias. https://www.forexcrunch.com/blog/2024/07/08/eur-usd-forecast-dollar-carries-on-struggle-after-weekly-slide/

2024-07-07 08:10

The monthly US employment report showed a surge in the unemployment rate to 4.1%. Canada’s labor market weakened sharply, with the economy losing jobs in June. Next week, investors will only focus on US inflation data. The USD/CAD weekly forecast is bearish as the dollar falls amid a series of downbeat reports and a dovish Powell. Ups and downs of USD/CAD The USD/CAD pair had a bearish week as the dollar weakened due to poor economic data. At the same time, Powell’s slightly dovish speech weighed on the currency. US figures showed a drop in job vacancies, higher initial jobless claims, and a weaker service sector. Moreover, the monthly employment report showed a surge in the unemployment rate to 4.1%. An easing labor market will allow the Fed to start lowering borrowing costs. Furthermore, when Powell spoke, he acknowledged the recent decline in inflation. He said it would pave the way for rate cuts. Meanwhile, Canada’s labor market weakened sharply, with the economy losing jobs in June. At the same time, the unemployment rate rose to 6.4%. Next week’s key events for USD/CAD Next week, investors will only focus on US inflation data. The consumer and wholesale inflation reports will show the state of price pressures in the country. Last month, consumer inflation eased to 3.3%. Moreover, the Fed’s preferred measure of inflation fell to 2.6% in May, a sign that the 2% target is within reach. If next week’s reports continue this downtrend, there will be an increase in Fed rate cut expectations. This would weaken the dollar against the loonie. On the other hand, if inflation beats forecasts, the dollar will rally as the Fed will likely keep delaying cuts. USD/CAD weekly technical forecast: Bears challenge range support On the technical side, the USD/CAD price is bearish as it trades below the 22-SMA with the RSI below 50. However, there is no clear direction in the market since the price has mostly traded sideways, with support at 1.3601 and resistance at 1.3800. The previous bullish trend failed to break above the 1.3800 resistance and entered a period of consolidation. Bears are now testing the 1.3601 support level. If the bears break below this level next week, the price will likely retest the 1.3400 key support. However, if bears fail to continue lower, USD/CAD will keep consolidating. https://www.forexcrunch.com/blog/2024/07/07/usd-cad-weekly-forecast-dollar-slips-amid-weak-nfp/