2024-04-09 09:35

US Treasury yields rose due to a decline in rate cut expectations. The likelihood of a Fed rate cut in June fell to around 54%. Japan’s Finance Minister, Shunichi Suzuki, repeated his warning against sharp currency moves. In a tight move, the USD/JPY price analysis leaned bullish as the yen weakened due to a rise in US Treasury yields. However, warnings of a possible intervention kept the USD/JPY pair from breaching the $152 level. Meanwhile, the dollar was steady ahead of the US inflation report. US Treasury yields rose on Tuesday due to a decline in rate cut expectations. The likelihood of a Fed rate cut in June fell to around 54% after Friday’s jobs report. An unexpected increase in employment in March had markets shifting their outlook on US interest rates. Currently, investors expect 60bps of cuts in 2024, a smaller figure than the Fed’s forecast of 75bps. Consequently, short-term yields, which reflect rate-cut expectations, have rallied. Ideally, a rally in yields would have pushed the USD/JPY pair higher. However, Japanese authorities have kept a lid on price increases with their repeated warnings about a possible intervention. On Tuesday, Japan’s Finance Minister Shunichi Suzuki repeated his usual statement that authorities would do whatever it takes to deal with excessive currency moves. At the same time, Bank of Japan governor Kazuo Ueda hinted at possibly reducing economic stimulus if inflation continues to trend higher. However, a catalyst for the dollar would likely bring back sharp moves. Notably, investors are awaiting the US inflation report. Hotter-than-expected figures could push the USD/JPY price beyond $152, prompting an intervention. USD/JPY key events today Traders will likely remain on the sidelines, as no high-impact reports are coming from the US or Japan. USD/JPY technical price analysis: Bullish momentum wanes near a solid barrier On the technical side, the USD/JPY price is above the 30-SMA, showing bulls are back in the lead. The previous sharp bearish move has reversed, and now the price is approaching the pivotal 152.00 key resistance level. Although the RSI is above 50, the bullish momentum has gradually faded. As a result, there is a bearish RSI divergence that might allow bears to take control. If bulls fail to regain enough momentum to breach the 152 level, bears might break below the 30-SMA to target 150.00. Such a move would allow the price to retrace 38.2% of the previous trend. https://www.forexcrunch.com/blog/2024/04/09/usd-jpy-price-analysis-soaring-us-treasury-yields-weaken-yen/

2024-04-08 15:51

The USD/CHF pair seems overbought after failing to hit the upper median line. The fundamentals could change the sentiment on Wednesday. Failing to take out the 0.9 psychological level announced exhausted sellers. The USD/CHF price rallied mildly on Monday, trading near 0.9050, versus Friday’s low of 0.8998. The pair climbed as high as 0.9065 today. However, the buyers could be exhausted after the upside. The greenback received a helping hand from the US economy on Friday. The Non-Farm Payrolls came in at 303K, versus 212K expected and 270K in the previous reporting period. The Unemployment Rate dropped unexpectedly from 3.9% to 3.8%, while Average Hourly Earnings reported 0.3% growth, matching expectations. Today, the unemployment rate in Switzerland jumped from 2.2% to 2.3%, even if traders expected the rate to remain at 2.2%. The US will release the NFIB Small Business Index and RCM/TIPP Economic Optimism tomorrow, but these won’t affect the markets a lot. The fundamentals should have a major impact on Wednesday when the US will publish the inflation figures. The Consumer Price Index is expected to report a 0.3% growth in March, after a 0.4% growth in February, CPI y/y may announce a 3.4% growth versus 3.2% in the previous month, while Core CPI could register a 0.3% growth, after a 0.4% growth in February. Higher-than-expected inflation should boost the US dollar as the Fed’s rate cut speculation may fade. Technically, the currency pair rallied after failing to take out the 0.9000 psychological level. It has registered only a false breakdown below this downside obstacle. Now it has turned to the upside. Also, its failure to stay below the median line (ml) revealed exhausted sellers. Now, it was about to hit the upper median line (uml), representing a dynamic resistance. However, the sellers took the lead again, retreating from the daily highs. Failing to hit the upper median line showed an overbought situation. Still, staying near the dynamic resistance may announce an imminent breakout and continuation. https://www.forexcrunch.com/blog/2024/04/08/usd-chf-price-recovers-above-0-90-focus-on-us-cpi/

2024-04-08 09:59

The dollar rose on Friday due to a positive employment report. The US reported an additional 303K jobs in March and a drop in the unemployment rate. The European Central Bank will meet on Thursday this week. An early session downturn pointed to a bearish tilt in the EUR/USD outlook, with the dollar standing resolute in anticipation of this week’s inflation data. At the same time, investors were gearing up for the European Central Bank meeting later in the week. The dollar surged on Friday due to a positive employment report. However, it ended last week lower after a mixed set of data. Meanwhile, rate-cut bets fluctuated as investors kept readjusting according to incoming data. US service activity data at the start of last week gave the impression that the economy was slowing down. Consequently, traders thought this would also lower inflation. However, this view changed when the US reported an additional 303K jobs in March and a drop in the unemployment rate. This was a sign that demand in the labor market was still high. Therefore, there is a higher risk that inflation will spike if the Fed starts cutting interest rates too soon. Investors will now focus on inflation figures coming on Wednesday. A hotter-than-expected report would likely lead to a more hawkish outlook for the Fed. The European Central Bank will meet on Thursday this week. Traders expect the central bank to hold rates and signal the first cut in June. Unlike the Fed, ECB policymakers are more confident that inflation is heading for the 2% target. This increases the chance that the ECB will cut rates before the Fed. EUR/USD key events today It will be a slow start to the week for the EUR/USD pair as neither the Eurozone nor the US will release any key reports. EUR/USD technical outlook: Price retreats from trendline barrier On the charts, the EUR/USD price is falling after meeting a strong resistance trendline at the 1.0875 level. However, indicators on the chart point to a bullish bias. The 30-SMA is pointing upward and sits below the price, showing an uptrend. At the same time, the RSI trades above 50 in bullish territory. Therefore, if the price respects the SMA as support, it will rise to retest the resistance trendline. On the other hand, if bears are ready to take over, the price will break below the SMA and the 1.0800 key support. https://www.forexcrunch.com/blog/2024/04/08/eur-usd-outlook-dollar-holds-firm-ahead-of-inflation-numbers/

2024-04-08 08:49

Data revealed that Canada’s economy unexpectedly shed 2,200 jobs in March. The US added an impressive 303K jobs in March. Fundamentals support further upside for the USD/CAD pair. The USD/CAD forecast points northward as the Canadian dollar weakens while the dollar holds on to gains after Friday’s employment figures. Traders are scaling back expectations for a Fed cut in June while simultaneously increasing bets for a BoC cut in June. On Friday, data revealed that Canada’s economy unexpectedly shed 2,200 jobs in March. Meanwhile, the unemployment rate soared to a bigger-than-expected 6.1% during the same period. This report revealed weakness in the labor market and the economy. Consequently, there is more pressure on the Bank of Canada to cut interest rates. Before the report, there was a 68% likelihood that the BoC would cut rates in June. However, after the report, this figure rose to 75%. On the other hand, the US dollar strengthened on Friday after another blockbuster jobs report. Unlike Canada, the US added an impressive 303K jobs in March. Additionally, the unemployment rate fell to 3.8, indicating robust labor market conditions. As a result, investors scaled back bets that the Fed would cut interest rates in June. The rate cut outlook between the Fed and the Bank of Canada has diverged with these latest employment figures. The US economy remains robust, allowing the Fed to hold high rates for longer. Meanwhile, Canada’s economy is weak, and this could prompt the BoC to start cutting rates in June. These fundamentals support further upside for the USD/CAD pair. USD/CAD key events today There are no major events today that might cause a lot of volatility. Therefore, the USD/CAD pair might consolidate. USD/CAD technical forecast: Bullish momentum stalls at channel resistance On the technical side, the USD/CAD price is trading in a bullish channel and recently retested the channel resistance. Moreover, the price sits above the 30-SMA with the RSI over 50, indicating a strong bullish bias. However, since the price recently rose to the channel resistance, it might now pull back to retest the SMA or the channel support. Still, bulls will remain in control as long as the price stays within the channel. Furthermore, with bulls in the lead, the USD/CAD pair could soon break past the 1.3650 resistance level. https://www.forexcrunch.com/blog/2024/04/08/usd-cad-forecast-cad-retreats-usd-advances-on-jobs-data/

2024-04-07 21:48

Fed policymakers pushed back on expectations for a cut in June. The US NFP report showed robust demand in the labor market. Canada released a dismal employment report. A close look at the USD/CAD weekly forecast reveals hints of a bullish trend as the policy outlook between the US and Canada takes divergent paths. Ups and downs of USD/CAD USD/CAD had a bullish week where bets for a June Fed cut fell while those for a June BoC cut increased. The week was volatile for the dollar, which fell when the US reported a slowdown in service activity. However, it ended higher after hawkish Fed remarks and an upbeat jobs report. Fed policymakers pushed back on expectations for a cut in June, saying inflation had stalled. Moreover, the US NFP report showed robust demand in the labor market, leading to a decline in rate-cut bets. On the other hand, Canada released a dismal employment report, with employment dropping and unemployment rising. This showed a weaker economy that might pressure the BoC to start cutting interest rates. Next week’s key events for USD/CAD Next week, investors will focus on US consumer and producer inflation data. Moreover, the Bank of Canada will decide on monetary policy. Investors will be keen to see whether inflation will beat forecasts again. In such a case, rate-cut bets might fall further after the jobs report, allowing the USD/CAD pair to rally. On the other hand, if inflation falls, rate-cut bets will increase. Meanwhile, markets expect the Bank of Canada to hold rates at 5% on Wednesday. They will also focus on messaging regarding rate cuts. For now, futures point to the first cut in June. USD/CAD weekly technical forecast: Bulls maintain control despite weak momentum On the technical side, USD/CAD is bullish as the price has risen well above the 22-SMA. At the same time, the price is trading within a bullish channel. Meanwhile, the RSI has been in a tight sideways move in bullish territory. This is a sign that momentum is weak, although bulls are in the lead. The price will likely start a stronger trend when it breaks out of the bullish channel. A break above the channel resistance would lead to a retest of the 1.3800 key resistance level. Moreover, it would allow the price to trend higher. On the other hand, if the price breaks below the channel support in the coming week, the trend will reverse. https://www.forexcrunch.com/blog/2024/04/07/usd-cad-weekly-forecast-fed-boc-rate-divergence/

2024-04-06 06:20

US manufacturing activity improved while services activity declined. The US jobs report showed a bigger-than-expected increase in employment in March. Traders scaled back expectations for the first Fed cut in June. The EUR/USD weekly forecast leans toward the bearish side as investors adjust their expectations on Fed rate cuts following a buoyant jobs report. Ups and downs of EUR/USD Last week, EUR/USD fluctuated but ended with gains after a series of economic reports from the US. Investors mainly focused on employment and PMI data, which showed a mixed picture of the economy. Manufacturing activity improved while services activity declined. Meanwhile, unemployment claims rose, while the NFP report beat forecasts. Initially, the services and jobless claims reports increased rate cut expectations, leading to a rally in the EUR/USD pair. However, the week ended with a blockbuster US jobs report showing a bigger-than-expected increase in employment in March. At the same time, the unemployment rate fell, revealing a still-tight labor market. Consequently, traders scaled back expectations for the first Fed cut in June. Next week’s key events for EUR/USD The US consumer and producer price indices will show the country’s inflation state. This insight will shape the Fed’s rate cut outlook. Economists expect the CPI to drop from 0.4% to 0.3%. A decline in inflation would support expectations that the Fed will cut interest rates in June. However, there is also a chance that the figure will beat forecasts. This would lead to declining rate cut expectations, especially after the upbeat jobs report. Meanwhile, traders will also look at the FOMC meeting minutes, which might contain clues on the outlook for interest rates. EUR/USD weekly technical forecast: Price retreats as 22-SMA resistance holds strong On the technical side, the EUR/USD price is declining after finding strong resistance at the 22-SMA. Moreover, the price trades with the nearest support at 1.3200 and the nearest resistance at 1.3800. The bullish trend recently reversed when the price started trading below the 22-SMA and the RSI below 50. Bulls tried to take back control at one point but failed to push above the 1.0950 key resistance level. This allowed bears to push the price back below the 22-SMA before retesting it as resistance. And now, bears are targeting the 1.0700 support. A break below this level would confirm a continuation of the downtrend. Moreover, the price would be free to retest lower support levels like 1.0500. https://www.forexcrunch.com/blog/2024/04/06/eur-usd-weekly-forecast-upbeat-nfp-pours-water-on-feds-cut/