2024-03-11 09:46

Canada’s jobs grew more than expected in February. The US unemployment rate surged to 3.9% compared to expectations of 3.7%. Oil fell on Friday and ended last week down as investors worried about demand in China. The USD/CAD outlook reveals a slight bearish tone as markets juxtapose Canada’s upbeat employment report with the mixed signals from the US job market. Yet, amidst this comparison, the pair finds support from softer oil prices, contributing to the weakening of the Canadian dollar. On Friday, both the US and Canada released employment reports. In Canada, jobs grew more than expected in February, showing a robust labor market. As a result, the Bank of Canada has more reason to delay rate cuts. Meanwhile, the US released a mixed report, showing weakness in the labor market. Employment increased, but the unemployment rate surged to 3.9% compared to expectations of 3.7%. Therefore, there is more evidence that demand in the economy is weakening, paving the way for rate cuts starting in June. Markets expect the first BoC cut in June, just like the Fed. However, unlike the Fed, which is gaining confidence that inflation is declining, the BoC needs more convincing. Consequently, the Canadian dollar strengthened against the US dollar. This sets the stage for a downtrend in the pair. However, the recent decline in oil prices capped gains in Canada’s currency. Oil fell on Friday and ended last week down as investors worried about demand in China. China is the second largest consumer of oil. Therefore, poor demand in the country hurts oil prices. USD/CAD key events today There won’t be any major reports from the US or Canada today. Consequently, investors will keep digesting Friday’s employment reports. USD/CAD technical outlook: Price retests channel support after breakout On the charts, USD/CAD has pulled back to retest its recently broken channel support. This move came after the price had made new lows below the 1.3450 key support level. To fully confirm the channel breakout, the price must make a lower low after retesting the channel support as resistance. Therefore, if the channel support line holds firm, the price will bounce lower for a lower low. Moreover, bears will get a chance to target the 1.3375 support level. However, if the price goes back into the bullish channel and above the 30-SMA, it will confirm a false breakout. Consequently, the price would rise to retest the 1.3600 resistance level. https://www.forexcrunch.com/blog/2024/03/11/usd-cad-outlook-markets-assess-canadas-upbeat-jobs-report/

2024-03-11 08:43

Japan’s conditions align for the Bank of Japan to start hiking interest rates. Policymakers expect significant pay increases in Japan. The likelihood of a Fed rate cut in June rose above 70%. The USD/JPY forecast reveals a bearish sentiment on Monday as markets gain confidence that the BoJ might reverse its policy this month. As a result, the yen is gaining against the dollar. At the same time, there’s more confidence that the Fed will cut rates in June, weakening the dollar. Notably, conditions in Japan align for the Bank of Japan to start hiking interest rates. First, the economy is faring much better than expected. Moreover, it avoided a recession in the fourth quarter. Second, policymakers expect significant pay increases when wage negotiations conclude on Wednesday. Pay increases put money in consumer pockets, driving spending and inflation. Consequently, there is an increasing chance the BoJ will hike on 19th March. On the other hand, the dollar weakened on Friday after the US employment report revealed cracks in the labor market. Although employment in the US rose in February, the unemployment rate beat forecasts, implying weaker demand. Consequently, the likelihood of a rate cut in June rose above 70%. As the BoJ prepares to hike interest rates, the Fed gains more confidence that inflation is on a downtrend. Therefore, rates will likely start declining in the US. Again, the BoJ is playing on the opposite side of the field. This policy divergence was the major cause of the yen’s recent weakness. However, the current policy divergence might allow the yen to recover most of its lost value. USD/JPY key events today It might be a slow day for the pair, as the calendar lacks major economic events that might cause volatility. USD/JPY technical forecast: Price poised for 100% retracement of previous trend On the technical side, the USD/JPY price has hit its first and second targets. Therefore, the price might soon retrace 100% of the previous uptrend. The price is currently on a steep downtrend, breaking below major support levels without pause. The decline is so strong that the price has not pulled back even once to retest the 30-SMA resistance. Furthermore, the RSI has entered the oversold region, indicating solid bearish momentum. Therefore, the price might soon reach the 146.01 key support level, representing 100% retracement of the previous trend. https://www.forexcrunch.com/blog/2024/03/11/usd-jpy-forecast-yen-bullish-on-boj-policy-reversal-prospects/

2024-03-09 10:50

There is a higher chance the Fed will cut rates by the end of the year. There is a divergence in policy outlooks between the Fed and the BoE. The dollar weakened after a mixed employment report. The GBP/USD weekly forecast leans bullish as market participants expect the Fed to cut rates much earlier than the Bank of England. Ups and downs of GBP/USD The pair had a bullish week where the dollar weakened after Powell’s testimony to Congress. On Wednesday and Thursday, Powell restated the Fed’s commitment to lower inflation to its 2% target. However, he also said there was a high chance the Fed would cut rates by the end of the year. Notably, there is a divergence in policy outlooks between the Fed and the BoE. While Fed rate cuts are coming closer, the BoE might be the last major central bank to cut rates. As a result, the pound made new highs in the week. Additionally, the dollar weakened after a mixed employment report showing a big employment increase and a higher-than-expected unemployment rate. Next week’s key events for GBP/USD High-impact data from the UK next week will include data on employment, manufacturing and economic growth. Meanwhile, investors will focus on inflation and sales data from the US. The UK economy has performed better than expected in 2024. Therefore, if the economy shows strength next week, it could propel the pound to new heights. Meanwhile, the US dollar weakened last week amid rising rate cut expectations. The inflation report will also have a big impact on the outlook for rate cuts. Consequently, a figure above or below estimates might cause a lot of volatility. GBP/USD weekly technical forecast: Bulls break above 1.2800 resistance On the technical side, GBP/USD is bullish and has made a new high above the 1.2800 key resistance level. After taking control from bears and reversing the trend, bulls pushed the price to the 1.2800 key level, where it paused. Moreover, there were signs of weaker bullish momentum. Consequently, bears got a chance to challenge the bullish trend. The price broke below the 22-SMA, and the RSI dipped below 50. However, bears could not go below the 1.2500 key support level. At this point, the bulls regained momentum, taking back control and breaking above 1.2800. There is a high chance this bullish move will continue next week. Therefore, GBP/USD might retest the 1.3002 key psychological level. https://www.forexcrunch.com/blog/2024/03/09/gbp-usd-weekly-forecast-fed-set-to-slash-rates-ahead-of-boe/

2024-03-09 10:45

The dollar weakened after Powell confirmed the likelihood of a rate cut. The ECB held rates on Thursday, with markets expecting the first rate cut in June. A mixed US employment report revealed some cracks in the US labor market. The EUR/USD weekly forecast shows upside potential for the pair as investors gain more confidence in a Fed rate cut by June. Ups and downs of EUR/USD EUR/USD ended last week in the green as investors got a clearer picture of the Fed’s policy outlook. Notably, the dollar weakened after Powell confirmed the likelihood of a rate cut before the year ends. Still, he stated that the Fed would keep assessing incoming data for evidence that inflation is heading for the 2% target. Meanwhile, the ECB held rates on Thursday, with markets expecting the first rate cut in June. However, dollar weakness kept the euro up. Moreover, a mixed US employment report revealed some cracks in the US labor market, further weakening the dollar. The unemployment rate beat forecasts, rising to 3.9%. Next week’s key events for EUR/USD Next week, traders will assess consumer and producer inflation reports from the US. Moreover, there will be a report on retail sales. Markets have been speculating on the possible timing of the first rate cut. Last week, Powell said they are waiting for more evidence that inflation is on a downtrend. Therefore, investors will watch for signs that headline and core inflation are descending. A decline in inflation will push up bets that the Fed will cut rates in June. On the other hand, if inflation remains persistent, the dollar might recover as rate-cut bets drop. EUR/USD weekly technical forecast: Price rises strongly from 0.618 Fib support On the technical side, EUR/USD is climbing after finding support at the 0.618 Fib retracement level. Bears managed to retrace 61.8% of the previous bullish move before bulls took back control by breaking above the 22-SMA. Initially, the bullish trend paused at the 1.1100 key resistance level. This allowed the bears to take control. However, the bearish move was temporary. Therefore, bulls will likely retarget the 1.1100 resistance level. Moreover, a break above this solid resistance would confirm a continuation of the previous bullish move. The bullish trend will continue as long as the price stays above the 22-SMA and the RSI stays in bullish territory above 50. https://www.forexcrunch.com/blog/2024/03/09/eur-usd-weekly-forecast-fed-rate-cut-probability-rises/

2024-03-08 10:14

Crude imports to China rose in the first two months of the year. Data from Canada showed a larger-than-expected trade surplus in January. The US dollar weakened significantly after Powell’s testimony. The USD/CAD price analysis reveals a bearish trend as the Canadian dollar rose, fueled by surging oil prices. Simultaneously, the dollar’s decline, prompted by Powell’s dovish remarks, weighed on the currency. Meanwhile, there was caution ahead of the US jobs report. Oil prices rose on Friday amid signs of improving demand in the US and China. Notably, there was a decline in distillate and gasoline inventories last week. Meanwhile, Crude imports to China rose in the first two months of the year. An increase in oil prices boosts the Canadian dollar as Canada mainly exports oil. Additionally, data from Canada revealed a larger-than-expected trade surplus in January, supporting the Canadian dollar. Meanwhile, the US dollar has weakened significantly across the board after Powell’s testimony, allowing other major currencies to strengthen. Powell said the Fed was slowly gaining confidence that inflation was declining. Therefore, rate cuts might come later in the year. On the other hand, the Bank of Canada held rates on Wednesday and pushed back on expectations of rate cuts. Governor Tiff Macklem said it was too early to consider rate cuts as underlying inflation was still high. Consequently, the diverging outlooks between Canada and the US have weighed heavily on USD/CAD. Investors eagerly await employment data from the US and Canada for more clues on monetary policy. Economists expect an increase of 20,000 jobs in Canada in January. Meanwhile, the US might add 200,000 jobs in February. USD/CAD key events today Canada employment change Canada unemployment rate US nonfarm employment change US unemployment rate USD/CAD technical price analysis: Bears shatter bullish boundaries On the technical side, USD/CAD bears have taken full control, breaking out of the bullish channel. Moreover, the price has broken below a significant support level at 1.3450. Meanwhile, the indicators on the chart show a steep bearish move. The 30-SMA trades far above the price, indicating a massive swing. At the same time, the RSI has fallen into the oversold region, supporting solid bearish momentum. Given the solid bearish bias, the price might hit the next target at 1.3375. However, it might pull back to retest the 1.3450 level as resistance before continuing lower. https://www.forexcrunch.com/blog/2024/03/08/usd-cad-price-analysis-bears-pounce-amid-weak-usd-oil-rise/

2024-03-08 09:15

Powell was more confident that the Fed would lower interest rates this year. The ECB held rates on Thursday and prepared for the first rate cut in June. There is a growing divergence in the outlook for inflation and growth between the Eurozone and the US. The EUR/USD outlook appears strongly bullish, spurred by the recent downturn in the dollar ahead of the eagerly awaited nonfarm payrolls report. Notably, the dollar extended declines, building on the momentum from the previous session as investors gained confidence in the likelihood of a Fed rate cut later this year. On Thursday, Powell was more confident that the Fed would lower interest rates this year. His remarks sent Treasury yields and the dollar lower, allowing the euro to make new highs. Additionally, data from the US revealed that initial jobless claims held steady last week while continuing claims rose. Investors are preparing for the all-important nonfarm payrolls report, which will give clues on the Fed’s next move. Economists expect slower job growth in February, which could push EUR/USD higher. Meanwhile, the European Central Bank held rates on Thursday and prepared for the first rate cut in June. Notably, the central bank cut its forecasts for inflation and growth, signalling looming rate cuts. Although EUR/USD rose on Thursday, the outlook for the pair is bleak. There is a growing divergence in the outlook for inflation and growth between the Eurozone and the US. In the US, the economy remains resilient, and inflation is persistent. Meanwhile, inflation in the Eurozone is declining, and growth is slowing down. Consequently, interest rates in the Eurozone might come down earlier and faster than in the US, which would be bearish for EUR/USD. EUR/USD key events today US average hourly earnings m/m US nonfarm employment change US unemployment rate EUR/USD technical outlook: Bullish momentum peaks near significant 1.0950 barrier On the technical side, EUR/USD has made fresh highs near the 1.0950 key resistance level. Moreover, the price has hit its bullish channel resistance, supporting a solid bullish bias. Initially, the price had been stuck in consolidation below the 1.0850 key level. However, bullish momentum surged when the price broke above the level. Consequently, it rose well above the 30-SMA, while the RSI rose to the overbought region. However, the price might pull back temporarily to retest the SMA, as it faces a strong barrier. There is resistance at the 1.0950 key level and the channel resistance line. https://www.forexcrunch.com/blog/2024/03/08/eur-usd-outlook-dollar-declines-as-us-jobs-data-looms/