2024-07-05 10:35

Investors eagerly await the US nonfarm payrolls report. For the first time in over a month, the yen is gaining against the dollar. The yen has lost 12% of its value since the beginning of the year. The USD/JPY price analysis leans south as the yen pulls away from its 38-year low, strengthening for the second session. On the other hand, the dollar was fragile as investors eagerly awaited the US nonfarm payrolls report. For the first time in over a month, the yen is gaining against the dollar. However, the risk of intervention remains high. The currency has lost 12% of its value since the beginning of the year. Traders sold the yen and bought the dollar due to the wide gap in rates between the US and Japan. Although the BoJ has started its rate-hiking cycle, the future remains bleak. Consumption in Japan remains weak, and a fragile economy complicates the outlook for a rate hike. Therefore, investors have continued selling the yen. This pushed the BoJ to intervene in the market twice. However, the impact was only temporary, as the decline later continued. Japan’s Finance Minister repeated his usual warning on Friday, saying Japan will keep a close eye on financial markets. Meanwhile, after a week of downbeat economic data, the dollar was bruised on Friday. The US economy is slowing down, and employment and business activity data confirmed this. Consequently, markets have raised the likelihood of a September Fed rate cut to 73%. However, this might change with the upcoming monthly employment figures. If the US adds fewer jobs than expected, rate cut expectations will rise. The reverse is also true. USD/JPY key events today US average hourly earnings m/m US nonfarm payrolls US unemployment rate USD/JPY technical price analysis: Bears take the lead after bearish RSI divergence On the technical side, the USD/JPY price has broken below the 30-SMA for the time in many weeks. The break indicates a shift in sentiment from bullish to bearish. At the same time, the RSI has dipped into bearish territory below 50, suggesting strong downside momentum. Bulls got exhausted as the price approached the 162.01 key level. Notably, the RSI made a bearish divergence, highlighting weaker bullish momentum. This allowed bears to take charge by pushing the price below the 30-SMA. The path is now clear for the price to revisit support levels like 160.00 and 158.00. https://www.forexcrunch.com/blog/2024/07/05/usd-jpy-price-analysis-yen-rebounds-amid-intervention-fears/

2024-07-05 08:12

The dollar was on the back foot on Friday after a week of poor economic data. Economists expect the US economy to add 191,000 jobs in June. Investors cheered a looming Labour Party majority win in the UK. The GBP/USD outlook shows an uptrend, with the dollar easing ahead of the US monthly employment report. Meanwhile, the pound rallied as the UK general election pointed to a Labour Party majority win. The dollar was on the back foot on Friday after a week of poor economic data. Figures on employment and business activity have all pointed to a slowdown in the economy that could push the Fed to consider a rate cut in September. However, investors are still awaiting the major monthly employment report. Economists expect the economy to add 191,000 jobs in June. This would be a drop from last month when there were 272,000 new jobs in the US. Meanwhile, the unemployment rate might hold steady at 4.0%. Elsewhere, investors cheered a looming Labour Party majority win in the UK that could mean some political stability in the country. Moreover, the pound is heading for a 1% gain this week against the dollar. Meanwhile, British employers believe that wage growth will slow in the next year. This would give the Bank of England room to start lowering borrowing costs. Furthermore, the central bank’s forecasts show wage growth dropping by 0.3% on a three-month basis. The BoE could be ready to cut rates by August or September. GBP/USD key events today US average hourly earnings m/m US non-farm employment change US unemployment rate GBP/USD technical outlook: Bulls weaken near the 0.618 Fib On the technical side, the GBP/USD price is on a steep bullish trend, sitting far above the 30-SMA. At the same time, the RSI is in the overbought region, supporting solid bullish momentum. The price recently broke out of a range between the 1.2625 support and the 1.2700 resistance. Bulls rose quickly but hit a pause when the price reached the 0.618 Fib retracement level. Here, the price started making smaller candles, indicating exhaustion. Consequently, there is a high chance the GBP/USD pair will pause or pull back to retest the 30-SMA support before continuing higher. If the bullish trend continues, the price might revisit the 1.2850 resistance level. https://www.forexcrunch.com/blog/2024/07/05/gbp-usd-outlook-dollar-dips-as-us-nfp-data-looms/

2024-07-04 10:46

US service sector business activity plunged to a 4-year low in June. Private employment in the US fell in June. Canada’s trade deficit in May was bigger than expected at C$1.93 billion. The USD/CAD outlook is bearish as the Canadian dollar rallies against a weak US dollar. The greenback fell as several US economic reports showed a softening economy, raising the likelihood that the Fed will cut rates in September. On Wednesday, investors focused more on US data, including business activity and employment. Service sector business activity plunged to a 4-year low in June. The ISM reported that the PMI fell from 53.8 to 48.8. Weakness in the economy is a relief for the Fed and will likely give policymakers the confidence to shift to a more dovish stance. Meanwhile, employment data showed some cracks in the labor market. Private employment in the US fell in June, surprising economists forecasting an increase. Meanwhile, unemployment claims edged higher, indicating a possible rise in the unemployment rate. A decline in labor market demand is the one thing that will put pressure on the Fed to start cutting rates. Therefore, investors will pay attention to the nonfarm payrolls report, which will give a better picture of the state of the labor market. Meanwhile, data from Canada revealed that the country’s trade deficit in May was bigger than expected at C$1.93 billion. This beat economists’ forecasts of a C$1.20 billion deficit. Moreover, it was the third month when exports fell more than imports, indicating a decline in economic activity. However, rate-cut bets remained low since the last inflation report revealed an acceleration in May. The likelihood of a cut in July fell to 45%. USD/CAD key events today Investors are not expecting any major reports from the US or Canada. Therefore, the pair might consolidate ahead of the US nonfarm payrolls report. USD/CAD technical outlook: Bears charge for the channel support On the technical side, the USD/CAD price has broken below the 1.3640 key support level after a sharp move lower. The bearish bias has strengthened with the price well below the 30-SMA and the RSI near the oversold region. After a false breakout, bears returned with enough momentum to head for the channel support. At the same time, the price is approaching the 1.3600 support. Therefore, the decline might pause and reverse to retest the channel resistance. However, the decline could continue past the support level if bears are still strong. https://www.forexcrunch.com/blog/2024/07/04/usd-cad-outlook-economic-softness-weighs-on-us-dollar/

2024-07-04 08:36

Private employers in the US hired fewer workers than expected in June. There was an unexpected increase in unemployment claims from 234,000 to 238,000. The UK service sector declined by a smaller margin than expected. The GBP/USD forecast points north, with the dollar frail after several downbeat economic reports in the previous session. Meanwhile, the pound strengthened on better-than-expected PMI data. The dollar had a tough time in the previous session as reports showed a slowdown in the economy that could push the Fed to start lowering borrowing costs. The US released data, which included private employment, service sector business activity, and unemployment claims. Private employers in the US hired fewer workers than expected in June. The ADP employment change occurred at 150,000, dropping from the previous 157,000. Meanwhile, economists had expected an increase of 163,000 jobs. Other employment figures revealed an unexpected increase in unemployment claims from 234,000 to 238,000 in the previous week. These reports indicated a decline in demand in the labor market, which has remained resilient for most of this year. If this trend continues with Friday’s nonfarm payrolls, the Fed will be pressured to cut interest rates. Furthermore, the services sector went from expansion to contraction in June as business activity declined. The ISM Purchasing Managers Index fell from 53.8 to 48.8, indicating a sharp slowdown. On the other hand, although UK service sector activity also declined, it was by a smaller margin than expected. The S&P Global’s services PMI fell from 52.9 to 52.1. Economists had expected the index to drop to 51.2. Investors will now wait for the UK parliamentary election results. GBP/USD key events today UK parliamentary elections GBP/USD technical forecast: Bulls take charge after consolidation On the technical side, the GBP/USD price is in a bullish rally after breaking out of a period of consolidation. Previously, the price traded in a large range with support at 1.2700 and resistance at 1.2850. However, bears gathered enough momentum to break below the support level. Unfortunately, the downtrend barely lasted because the price started ranging again. At the same time, the RSI made a bullish divergence, showing bears barely had the strength to continue lower. At this point, bulls took control and broke above the 1.2700 resistance. The path is now clear for the price to revisit the 1.2850 resistance level. https://www.forexcrunch.com/blog/2024/07/04/gbp-usd-forecast-economic-setbacks-leave-dollar-struggling/

2024-07-03 05:47

Oil briefly hit a two-month high, which helped the Canadian dollar rally. Canada’s manufacturing sector remained in contraction in June. The US dollar eased after Powell’s dovish remarks. The USD/CAD forecast leans bearish as the Canadian dollar firms after a brief rally in oil prices. At the same time, the loonie got support from a weaker US dollar after Powell made mildly dovish remarks regarding inflation. Canada’s economy benefits when fuel prices increase, as the country is a net oil exporter. At the same time, the country’s currency rises. On Tuesday, oil briefly hit a two-month high, which helped the Canadian dollar rally against the US dollar. Moreover, the loonie held on to gains despite a pullback in oil prices. Meanwhile, data from Canada showed the manufacturing sector remained in contraction in June. The manufacturing PMI held at 49.3, showing business activity was unchanged from the previous month. Notably, recent data on GDP and inflation has surprised to the upside. Consequently, expectations for BoC rate cuts have fallen. The chances of a cut in July fell below 50%. However, this might keep changing with incoming data. On the other hand, the US dollar eased after Powell’s remarks in the previous session. Powell acknowledged that there was progress on inflation and that the central bank would likely cut rates later in the year. Although he did not signal the number of cuts or the timing, it was clear that he was more confident inflation was on a downtrend. Consequently, rate cut expectations rose. Elsewhere, data revealed a surge in job vacancies in the US to 8.140 million compared to expectations of 7.910 million openings. USD/CAD key events today US private employment change US jobless claims US ISM services PMI FOMC minutes USD/CAD technical forecast: Bears in the lead after a false breakout On the technical side, the USD/CAD price made a false breakout above its channel resistance before bears took back control. Consequently, the price made a whiplash move as sentiment shifted suddenly from bullish to bearish. The price now trades below the 30-SMA, and the RSI is in bearish territory. Therefore, with bears in the lead, the price will likely continue lower to test the 1.3640 support level. This also means that the downtrend might continue with a lower low. However, if the price fails to make a lower low, bulls might make another attempt to break out of the bearish channel. https://www.forexcrunch.com/blog/2024/07/03/usd-cad-forecast-oil-price-surge-boosts-canadian-dollar/

2024-07-03 05:33

Powell noted significant progress on inflation in the US. There was an unexpected jump in US job openings in May. Eurozone inflation fell last month, but underlying price pressures remained high. The EUR/USD price analysis paints a bullish picture as the dollar remains fragile after Powell’s slightly dovish remarks. Meanwhile, the euro was strong, as data revealed that underlying inflation in the Eurozone remained high. The dollar eased on Tuesday after Powell’s speech, in which he assumed a moderately dovish tone. Powell noted significant progress on inflation, which could allow the Fed to cut rates later this year. Consequently, investors raised the likelihood of a September rate cut from 63% to 69%. Meanwhile, US employment data revealed an unexpected jump in job openings in May, indicating tight labor market conditions. Vacancies rose to 8.140 million compared to forecasts of 7.910 million. This report should have propelled the dollar higher. However, the market focus was on Powell’s speech. Elsewhere, Eurozone inflation fell last month, but underlying price pressures remained high. The headline CPI figure dropped to 2.5% after a 2.6% increase in May. Meanwhile, core inflation held at 2.9% compared to estimates of 2.8%, as service prices kept rising. Therefore, ECB President Christine Lagarde said there was no hurry to lower borrowing costs. Policymakers need time to watch where inflation will head. Other data from the Eurozone showed that the unemployment rate held at a low of 6.4% in May. The ECB might delay cuts due to labor market strength. As a result, chances of a cut in July have fallen while those in September have risen. EUR/USD key events today US ADP non-farm employment change US unemployment claims US ISM services PMI FOMC meeting minutes EUR/USD technical price analysis: Bulls make second attempt at 1.0750 barrier On the technical side, the EUR/USD price is making another attempt to breach the 1.0750 resistance level. The first attempt failed when the price fell back below the level. However, it respected the 30-SMA as support, a sign that bulls are in control. At the same time, the RSI has stayed above 50, supporting bullish momentum. Therefore, there is a high chance the price will break above 1.0750. If this happens, bulls will target the next resistance at 1.0850. On the other hand, if the attempt fails, the price will likely retest the 1.0675 support, staying in consolidation. https://www.forexcrunch.com/blog/2024/07/03/eur-usd-price-analysis-gaining-amid-feds-dovish-comments/