2024-05-30 08:23

Treasury yields have risen this week due to better-than-expected US data A recent auction in the US revealed lower demand for the country’s debt. Data from the Eurozone showed a bigger-than-expected increase in German inflation. The EUR/USD forecast points South as the dollar trades near a two-week high amid a rally in Treasury yields. Meanwhile, the euro remains weaker as markets prepare for an ECB rate cut next week. A rally in US yields spooked investors, leading to a scramble for the dollar’s safety. Treasury yields have risen this week due to better-than-expected US data, raising doubts about a Fed cut in September. At the same time, a recent auction in the US revealed lower demand for the country’s debt. Investors are now looking forward to US GDP and unemployment figures. However, the focus is on the core PCE price index, which comes on Friday. This report will show whether inflation is easing or remains stubborn. Consequently, it will significantly impact the outlook for rate cuts in the US. Elsewhere, data from the Eurozone showed a bigger-than-expected increase in German inflation by 2.8% in May. This was slightly bigger than the forecast of 2.7% and came after a rise of 2.4% in the previous month. However, economists had expected this spike. Therefore, it had little impact on expectations for an ECB rate cut next week. A Reuters poll revealed that all economists expect the European Central Bank to implement its first cut in June. Moreover, economists expect another cut in September and December. This is a more dovish outlook as markets forecast only two cuts in 2024. EUR/USD key events today US preliminary GDP q/q US unemployment claims US pending home sales m/m EUR/USD technical forecast: New low confirms a bearish reversal On the technical side, the EUR/USD price has broken below the 1.0800 critical support level after a sharp bearish move. This comes after the price broke out of its bullish channel. The initial breakout paused when bulls tried to take back control. However, bears overpowered them and broke below 30-SMA and 1.0800 to make a lower low. This confirms the start of a downtrend with lower highs and lows. Furthermore, the RSI shows solid bearish momentum as it prepares to dip into the oversold region. Given the strong bearish bias, the price will likely fall to retest the 1.0725 support level. https://www.forexcrunch.com/blog/2024/05/30/eur-usd-forecast-us-yields-rally-leads-dollar-to-2-week-top/

2024-05-29 10:11

There was a sharp improvement in US consumer confidence from 97.5 to 102.0 in May. US yields rose, leading to a decline in the yen. BoJ’s Seiji Adachi said the central bank could hike rates due to the weak yen. The USD/JPY forecast is bullish despite fluctuations amid rising US yields and hawkish Bank of Japan comments. The pair initially reached a 4-week high as the dollar and US yields rose. However, it pulled back after a BoJ policymaker signaled the chance of a rate hike in the near future. Data on Tuesday revealed a sharp improvement in US consumer confidence from 97.5 to 102.0 in May. This led to a rally in the dollar due to a drop in Fed rate cut expectations. At the same time, yields rose, leading to a decline in the yen. A robust economy means the Fed will hold on to high interest rates for longer. This, in turn, will widen the interest rate gap between Japan and the US. However, the yen strengthened slightly after BoJ board member Seiji Adachi said the central bank could hike rates if a weak yen led to higher inflation and inflation expectations. Notably, Japan’s currency has lost over 10% of its value this year despite the first BoJ rate hike in March. This decline has come from interest rate differentials between Japan and the US. Even interventions by the Bank of Japan have only temporarily impacted the yen. Analysts expect another BoJ hike in July. Meanwhile, a survey showed poorer consumer sentiment in Japan in May. The Bank of Japan’s plans to hike rates continue to face challenges as data shows weak economic demand. USD/JPY key events today Neither the US nor Japan will release high-impact events today. Therefore, investors will keep absorbing recent data. USD/JPY technical forecast: Bulls remain weak above 156.50 On the technical side, the USD/JPY price trades between the 156.50 support and the 158.01 resistance levels. Moreover, it has maintained its position above the 30-SMA, supporting a bullish bias. However, momentum has remained weak, with the price staying close to the SMA and the RSI failing to reach overbought levels. If this shallow trend continues, the price will reach the 158.01 resistance. On the other hand, if bulls give up control, it will break below the SMA and the 156.50 support level. https://www.forexcrunch.com/blog/2024/05/29/usd-jpy-forecast-retracement-amid-hawkish-boj/

2024-05-29 09:06

Australia’s consumer inflation rose by 3.6% in April. Expectations for a rate hike by the RBA in September rose from 12% to 20%. The US CB consumer confidence report revealed a jump from 97.5 to 102.0 in May. The AUD/USD price analysis shows mild bullish sentiment as investors absorb news of higher-than-expected inflation in Australia. However, the dollar was also strong after upbeat US data, putting a lid on price increases for the AUD/USD pair. Data on Wednesday revealed that Australia’s consumer inflation rose by 3.6% in April, beating forecasts of 3.4%. Moreover, this was an increase from 3.5% in March. The report led to a decline in RBA rate cut expectations, but the impact on the AUD/USD price was small. Meanwhile, expectations for a rate hike by the Reserve Bank of Australia in September rose from 12% to 20%. At the same time, investors pushed back the timing for the first rate cut to August next year. This puts the RBA well behind most major central banks. However, economists still expect the central bank to implement its first rate cut in Q4. The reaction to the jump in inflation would have been more significant if the dollar had been weaker. However, the dollar was also strong after data in the previous session showed a jump in US consumer sentiment. The CB consumer confidence report revealed an increase from 97.5 to 102.0 in May, giving investors more reason to doubt a Fed rate cut in September. Markets are now pricing in a bigger chance of the Fed cutting rates in November or December. AUD/USD key events today Investors will keep absorbing Australia’s inflation report as no key events come from the US. AUD/USD technical price analysis: Price bounces higher after 30-SMA retest On the technical side, the AUD/USD price has retested the 30-SMA support and is bouncing higher, a sign that bulls are in the lead. At the same time, the RSI is moving deeper into bullish territory after retesting the 50 level. Although the price broke below its previous bullish trendline, it has not yet confirmed a new bearish trend. To do this, bears must break below the 0.6600 level to make a lower low. However, at the moment, the price is eying the 0.6700 resistance level. A break above this level would continue the previous bullish trend. https://www.forexcrunch.com/blog/2024/05/29/aud-usd-price-analysis-australias-inflation-report-surprises/

2024-05-28 11:04

Economists expect a slight drop in Australia’s inflation, from 3.5% to 3.4%. Investors are only pricing in a 30% chance that the RBA will cut rates in December. Markets are awaiting Friday’s US core PCE price index. The AUD/USD price analysis indicates a resurgence in bullish momentum ahead of inflation data from Australia and the US. At the same time, the dollar was weaker as its recent rally ran out of steam. Investors are now awaiting fresh clues on the future path of Fed policy. Australia will release its CPI report on Wednesday, and economists expect a slight drop from 3.5% to 3.4%. This figure will influence the outlook for RBA rate cuts. Currently, markets expect the Reserve Bank of Australia to be among the last major central banks to cut interest rates. Notably, policymakers have remained cautious due to the stubborn services inflation in the country. Consequently, investors are only pricing in a 30% chance that the central bank will cut rates in December. Moreover, they are only fully pricing in the first rate cut in May next year. This will keep the Aussie strong, as the Fed might start cutting rates before the RBA. Meanwhile, data on Tuesday revealed a small increase in Australia’s retail sales of 0.1% in April after a 0.4% drop the previous month. However, economists had expected a bigger growth of 0.2%. This indicates weak consumer spending due to high borrowing costs. Elsewhere, the dollar paused its rally from last week when US data showed a resilient economy and lowered expectations for Fed rate cuts. Investors have digested the mixed economic signals and now await Friday’s core PCE price index. AUD/USD key events today US CB consumer confidence AUD/USD technical price analysis: Price rises to retest broken trendline On the technical side, the AUD/USD price has broken above the 30-SMA after finding support at the 0.6600 level. Previously, there had been a significant shift in sentiment when the price broke below its bullish trendline. However, it paused at the 0.6600 level and might rise to retest the trendline as resistance. Moreover, there is strong resistance at the 0.6700 level. Therefore, if this is only a retest of the recently broken trendline, the downtrend will resume with a break below 0.6600. However, if bulls have retaken control, the price will break above 0.6700 to make new highs. https://www.forexcrunch.com/blog/2024/05/28/aud-usd-price-analysis-aussie-gains-ahead-of-inflation-data/

2024-05-28 08:56

ECB’s Francois Villeroy confirmed that the central bank will implement the first rate cut next week. Philip Lane said ECB rate cuts would depend on underlying inflation and demand. Data on Monday revealed that German business morale stagnated in May. The EUR/USD outlook leans bullish as the euro gains despite dovish ECB comments. Markets expect the central bank to implement its first rate cut next week. However, a weaker dollar has kept the euro from falling. The greenback weakened as investors looked forward to more US inflation data. European Central Bank policymakers have remained confident about the start of the central bank’s rate-cut cycle. ECB’s Francois Villeroy confirmed that the central bank will implement the first rate cut next week. Meanwhile, Philip Lane said rate cuts would depend on underlying inflation and demand. Therefore, there is no doubt about rate cuts. The only uncertainty is on the pace of cuts and what will happen after the June meeting. Policymakers cannot ignore the fact that the Fed’s monetary policy will significantly impact the actions of other central banks. Therefore, although most major central banks are ready to start cutting rates before the Fed, they will be cautious after a few cuts. Elsewhere, data on Monday revealed that German business morale stagnated in May and missed forecasts. Consequently, the economy might recover at a slower pace than expected. Meanwhile, in the US, investors are awaiting the core PCE price index report, which will give further insight into the Fed’s policy. Economists expect the numbers to hold steady on a monthly basis. Any surprises could change the outlook for rate cuts. At the moment, markets are fully expecting the first cut in December. Meanwhile, there is a 60% chance that the Fed will cut rates in September. EUR/USD key events today US CB consumer confidence EUR/USD technical outlook: Bulls return with eyes on 1.0900 On the technical side, the EUR/USD price has gone from bearish to bullish after failing to maintain a move below the 30-SMA. Initially, bears took control when the price broke out of its bullish channel. However, they failed to go below the 1.0800 key level, allowing bulls to retake control. At the moment, the price sits above the 30-SMA, and the RSI is above 50, which is bullish territory. Therefore, the price will likely climb to retest the 1.0900 resistance level. However, to confirm a continuation of the previous uptrend, bulls must break above 1.0900. https://www.forexcrunch.com/blog/2024/05/28/eur-usd-outlook-euro-strengthens-despite-dovish-ecb/

2024-05-27 10:06

UK sales dropped by 2.3% in May, beating economists expectations of a 0.4% drop. The likelihood of a Bank of England rate cut in June is 10%. Investors eagerly await the US core PCE index report. The GBP/USD outlook shows renewed bullish momentum as the pound trades near a two-month high due to a decline in BoE rate cut expectations. Meanwhile, investors are gearing up for more inflation data from the US. Data from the UK on Friday showed a mixed picture of the economy, with sales declining and consumer confidence remaining high. Sales in the UK dropped by 2.3% in May, beating economists expectations of a 0.4% drop. This pointed to weaker demand in the economy that would pave the way for rate cuts in the UK. However, since the inflation report on Wednesday, investors have significantly scaled back expectations for a rate cut. Notably, although inflation fell to 2.3% from 3.2%, economists had expected a more significant drop to 2.1%. As a result, by Friday, the likelihood of a Bank of England rate cut in June was at 10%, down from 50% before the report. Some experts believe markets overreacted to the inflation miss. Meanwhile, in the US, investors expect the core PCE index report, which will show the state of underlying inflation. Policymakers have remained cautious since the last inflation report, awaiting more evidence that prices are cooling. If the PCE report reveals easing inflation, It might give policymakers more confidence, allowing them to shift to a more dovish stance. On the other hand, a higher-than-expected figure will raise doubts about rate cuts and strengthen the dollar. GBP/USD key events today Investors do not expect high-impact events today. Therefore, the price will likely consolidate. GBP/USD technical outlook: Price retests solid resistance at 1.2750 On the technical side, the GBP/USD price has returned to trade near its recent highs after puncturing the 30-SMA support line. However, the bullish move faces solid resistance from the 1.618 Fib and 1.2750 levels. Moreover, although the bias is bullish, some cracks show a possible looming reversal. First, bears have become strong enough to break below the 30-SMA, a sign that bulls are losing control. This came after the price made a bearish engulfing candle. Furthermore, the RSI still shows a bearish divergence, indicating weaker bullish momentum. Therefore, if the resistance holds firm, the trend might reverse to retest the 1.2601 support. https://www.forexcrunch.com/blog/2024/05/27/gbp-usd-outlook-declining-rate-cut-bets-boost-pound/