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/
2024-03-08 08:59
The USD/JPY bias remains bearish if it stays below the median line (ml). A new lower low activates more declines. The US data could change the sentiment today. The USD/JPY price registered a massive drop on Thursday as the US dollar tumbled. Meanwhile, the Japanese Yen got a boost from BoJ’s hawkish comments. The pair is trading at 147.88 at the time of writing, above today’s low of 147.52. The downside pressure remains high, so a deeper drop is still in the cards. The greenback is strongly bearish after Fed Chair Powell Testifies. Yesterday, the ECB left the monetary policy unchanged as expected but failed to change the sentiment. Today, the Japanese economic data came in mixed. The Economy Watchers Sentiment was reported at 51.3 points, above the 50.6 points expected. Leading Indicators came in at 109.9%, above the 109.7% expected, and the Current Account jumped from 1.81T to 2.73T, above the 2.07T estimated. Bank Lending rose by 3.0% less compared to the 3.2% growth forecasted, while Household Spending reported a 6.3% drop. The US data should be decisive and could change the sentiment today. The Non-Farm Employment Change is expected at 198K. The Average Hourly Earnings may report a 0.2% growth, while the Unemployment Rate could remain at 3.7%. Technically, the bias remains bearish as long as it stays below the descending pitchfork’s median line (ml). The sell-off was paused at 147.61 downside obstacle (historical level). It has registered only false breakdowns, signaling exhausted sellers. Staying above this static support and returning above the median line (ml) may announce a new bullish momentum. A new lower low, taking out the 147.61 level, activates more declines. The 147.00 psychological level represents a potential target if the rate continues to drop. https://www.forexcrunch.com/blog/2024/03/08/usd-jpy-price-pauses-downside-147-61-ahead-of-us-nfp/
2024-03-07 14:50
The bias is bullish despite minor retreats. The R3 is seen as a potential target. The ECB could change the sentiment today. The gold price extended its growth and is trading at $2,157 at the time of writing, below 2161 today’s high (all-time high). The US dollar’s weakness helped the yellow metal hit new highs. The bias is bullish, so more gains are in the cards. Yesterday, the ADP Non-Farm Employment Change came in at 140K, below 149K expected but above 111K in the previous reporting period. At the same time, JOLTS Job Openings was reported at 8.86M versus 8.80M expected. The greenback lost significant ground versus its rivals as the Federal Reserve is expected to start cutting the Federal Funds Rate soon. In addition, the BOC left the Overnight Rate unchanged at 5.00%. Today, the fundamentals should be decisive as well. The European Central Bank kept its monetary policy unchanged. The Main Refinancing Rate remained at 4.50%. The ECB press conference revealed a slightly optimistic outlook, but it primarily depended on the data to decide monetary policy. Furthermore, the Fed Chair Powell Testifies before the Senate Banking Committee should also have a major impact. The US NFP, Average Hourly Earnings, and Unemployment Rate data may bring high action tomorrow. As you can see on the hourly chart, the gold took out the $2,148 historical high and the first warning line (wl1) of the ascending pitchfork, confirming further growth ahead. Staying near these upside obstacles signaled an imminent breakout and continuation. The weekly R23 of $2,169 represents the next major upside target if the rate resumes growth. Still, after such impressive growth, we cannot exclude a probability of a corrective downside as the price needs to attract new buyers and more bullish energy before printing new all-time highs. So, the outlook remains bullish despite minor retreats. https://www.forexcrunch.com/blog/2024/03/07/gold-price-prints-all-time-high-focus-on-us-nfp/
2024-03-07 10:03
Markets are more optimistic that the BoJ will end negative rates in March. Most economists expect the Bank of Japan to end negative interest rates in April. US job openings in January declined, indicating weakness in the labor market. The USD/JPY outlook points south due to mounting expectations that the Bank of Japan will hike interest rates in March. Markets are optimistic that conditions are lining up for the Bank of Japan to end negative rates at this month’s meeting. Notably, there is a big chance the upcoming annual wage negotiations will lead to pay increases. As a result, policymakers are more willing to consider rate hikes. Meanwhile, most economists expect the central bank to end negative interest rates in April. Such a move would finally support the yen, which has weakened due to interest rate differentials. The BoJ remained dovish when most major central banks were hiking rates to tame inflation. As a result, Japan’s currency weakened significantly, constantly needing intervention for support. However, the narrative is slowly shifting. While other central banks, like the Fed, are considering cuts, the BoJ is on the verge of starting its hiking cycle. Meanwhile, the dollar weakened on growing confidence that the Fed would cut interest rates. Fed Chair Jerome Powell was slightly dovish when he said that rate cuts would be appropriate later in the year. Elsewhere, data from the US revealed a decline in job openings in January, indicating weakness in the labor market. A weaker labor market reduces the chance that inflation will flare up, allowing the Fed to consider rate cuts. USD/JPY key events today US initial jobless claims Powell’s testimony to Congress USD/JPY technical outlook: Price plummets following breakout from consolidation On the technical side, USD/JPY has fallen sharply after breaking out of consolidation. As a result, the price has hit its targets at the 0.382 and 0.618 Fib retracement levels. The price now sits well below the 30-SMA, with the RSI deep in the oversold region. Therefore, the bearish bias is strong. However, the price might need to pause after such a steep decline before continuing lower. A pullback could retest the 30-SMA as resistance before bouncing lower. Still, the price will likely soon break below the 0.618 Fib. In such a case, it might decline further to retest the 146.01 support level. https://www.forexcrunch.com/blog/2024/03/07/usd-jpy-outlook-yen-soars-on-boj-rate-hike-speculation/
