2024-02-12 10:33
The dollar gained momentum ahead of Tuesday’s pivotal inflation report. Forecasts for the US inflation report show that annual inflation will likely come in at 3.8%. ECB’s Fabio Panetta noted on Saturday that the time for rate cuts is fast approaching. The market painted a bearish picture for Monday’s EUR/USD outlook, with the dollar gaining momentum against the euro in anticipation of Tuesday’s pivotal US inflation report. Moreover, with no major reports on Monday, investors were awaiting Eurozone economic growth data on Wednesday. The release of the US inflation report will be a major event this week that will shape the outlook for Fed rate cuts. On many occasions, Fed policymakers have said they need more evidence that inflation is falling and will stay near the 2% target. Forecasts for tomorrow’s report show that annual inflation will likely come in at 3.8%. Notably, the Fed’s Lorie Logan said on Friday that economic reports must show inflation is on a durable decline. Otherwise, she is in no rush to cut interest rates. This was yet another reason for investors to dismiss the possibility of a rate cut in March. Meanwhile, in the Eurozone, the ECB’s Fabio Panetta noted on Saturday that the time for rate cuts is fast approaching. However, he did not comment on the exact timing. ECB policymakers slowly accept that the next policy move will be a rate cut. However, markets remain uncertain about when this might start. At the moment, there is a possibility that the ECB will implement the first rate cut in April. Still, there is a chance they might delay, following the trend among major central banks. EUR/USD key events today There won’t be any high-impact data from the US or the Eurozone. Therefore, the pair will likely drift as investors speculate on the upcoming US inflation report. EUR/USD technical outlook: Bears resurface at 1.0800 resistance On the technical side, the EUR/USD price is bouncing lower after retesting the 1.0800 key resistance level. Although the price occasionally chops through the 30-SMA, showing a shallow trend, it keeps making new lows, supporting a strong downtrend. Recently, the price made a new low by breaking below the 1.0800 support level. Afterwards, it made a corrective move to retest 1.0800 as resistance. Moreover, price action at this level shows that bears were waiting to resume the downtrend. If the price breaks below the 30-SMA, it could make a new low at the 1.0701 support level. https://www.forexcrunch.com/blog/2024/02/12/eur-usd-outlook-euro-pulls-back-eyes-on-us-inflation-data/
2024-02-12 09:27
Statistics Canada revealed that employment rose by nearly twice what analysts had expected. Investors dialed back bets on early rate cuts by the Bank of Canada. US data revealed a downward revision to December’s inflation figure. The USD/CAD forecast pointed down on Monday as investors continued to absorb Canada’s positive jobs report. On Friday, Statistics Canada revealed that employment rose nearly twice as much as analysts had expected. Meanwhile, wage growth and unemployment experienced slight declines. Still, the overall picture was of a resilient labor market. As a result, investors dialed back bets for early rate cuts by the Bank of Canada. At the moment, markets expect the first rate cut in June. This has also been the case in the US, where policymakers are waiting patiently to see that inflation is reaching the 2% target. Notably, the dollar weakened on Friday after data revealed a downward revision to December’s inflation figure. However, the outlook for Fed rate cuts remained the same, with nearly no chance they will start in March. At the same time, bets for March have gradually fallen and are now showing a 60% chance of a rate cut. Elsewhere, oil prices paused their recent rally after gaining about 6% last week. The pause on Monday came after Israel said it was done with strikes on Southern Gaza. As a result, this eased concerns of supply disruptions in the Middle East. Notably, reduced tensions in the area might lead to further declines in oil, which would hurt the Canadian dollar. USD/CAD key events today Investors do not expect any major releases from the US or Canada today. Therefore, it could be a slow day for the pair. USD/CAD technical forecast: Bears eye break below 0.5 fib support On the technical side, the USD/CAD pair has paused near the 0.5 Fib retracement level. Moreover, the price trades with the nearest support at 1.3375 and the nearest resistance at 1.3525. Meanwhile, the indicators on the chart show that bears have the upper hand as the price trades below the 30-SMA with the RSI slightly below 50. Therefore, there is a high chance bears will soon break below the 0.5 fib support. Afterward, the price will likely drop to the 1.3375 support level. However, the price must break below 1.3375 and start making lower lows for the price to trend lower. https://www.forexcrunch.com/blog/2024/02/12/usd-cad-forecast-upbeat-jobs-report-supporting-loonie/
2024-02-10 18:53
The RBA’s top policymaker warned that the bank could still hike rates to lower inflation. Traders are adjusting their policy outlooks for the RBA and the Fed. Market participants eagerly await the US inflation report. The AUD/USD weekly forecast takes on a neutral tone. This equilibrium comes from hawkish remarks echoed by both RBA and Fed policymakers. Ups and downs of AUD/USD Aussie fluctuated last week, with the Australian and US dollars showing strength. However, the week ended with the pair slightly up. The Australian dollar strengthened after the RBA policy meeting on Tuesday, where the central bank held rates. Moreover, the RBA’s top policymaker warned that the bank could still hike rates to lower inflation. RBA governor Michele Bullock repeated these hawkish remarks when she spoke on Friday, leading to a drop in rate cut bets. The same happened in the US, with more upbeat data and hawkish sentiments from Fed policymakers. Traders are adjusting their policy outlooks for the RBA and the Fed, with both likely to delay rate cuts. Next week’s key events for AUD/USD Next week, Australia will release data on employment. The last report showed a significant decline in employment in the country. Another such decline could raise bets on RBA rate cuts. On the other hand, the US will report on consumer and producer inflation. Additionally, there will be a report on retail sales. Market participants eagerly await the US inflation report because it will give clues on the Fed’s next policy move. Recent data from the country has dimmed expectations for early Fed rate cuts. Therefore, the inflation figure will determine whether early rate cuts are still possible. AUD/USD weekly technical forecast: Bears pause at the 0.618 fib retracement On the technical side, AUD/USD is in a downtrend after a sharp reversal at the 0.6870 level. The price fell from this level with solid bearish momentum, breaking below the 22-SMA. Consequently, there was a sudden shift in sentiment from bullish to bearish. Moreover, the price started making lower lows and lower highs. However, this decline has paused after retracing 0.618 of the previous bullish move. This key fib level might lead to a pullback to retest the 22-SMA or consolidation before the downtrend continues. Still, the bearish bias is strong, and the price will likely break below the fib level. If this happens, it might fall to the 0.6301 level. https://www.forexcrunch.com/blog/2024/02/10/aud-usd-weekly-forecast-rba-fed-embrace-hawkish-stances/
2024-02-10 18:51
The dollar was on the front foot after Powell’s hawkish speech. BoE policymaker Jonathan Haskel said he would need more evidence that inflation was cooling. The US and the UK will release major reports featuring inflation and retail sales. The GBP/USD weekly forecast has a neutral stance as both the pound and the dollar are strengthening due to a decline in rate-cut expectations. Ups and downs of GBP/USD Although the pound fell last week, it retraced most of that move by Friday. At the start of the week, the dollar was on the front foot after Powell’s hawkish speech. Notably, Powell took another chance to emphasize that the Fed will not cut rates until inflation is on a clear path to the 2% target. As a result, the probability of a March rate cut fell to 16.5% from 65.9% a month ago. Additionally, upbeat data from the US, including service sector business activity and jobless claims, supported the dollar. However, on Friday, the pound strengthened. BoE policymaker Jonathan Haskel said he would need more evidence inflation was cooling before changing his hawkish stance. Next week’s key events for GBP/USD The US and the UK will release major reports featuring inflation and retail sales. Investors will watch the US consumer and producer inflation and retail sales reports. Traders will get clues on the outlook for the Fed’s monetary policy. A drop in inflation could bring back bets for a March rate cut. Meanwhile, high inflation will likely leave no chance that the Fed will hike in March. Similarly, the UK inflation and the sales reports will show the state of the UK economy. Consequently, there might be a shift in the outlook for rate cuts in the UK. GBP/USD weekly technical forecast: Trend reverses as bearish RSI divergence plays out The GBP/USD trend has reversed to the downside after reaching the 1.2800 key resistance level. Bulls weakened when the price approached the 1.2800 level. As a result, the RSI made a bearish divergence. As bullish momentum faded, bears got stronger and pushed below the 22-SMA support. At the moment, the price is pulling back and might retest the 22-SMA as resistance before continuing lower. However, before lowering the price, bears must face the 1.2500 support level. A break below this level would allow the price to retest lower support levels like 1.2080. https://www.forexcrunch.com/blog/2024/02/10/gbp-usd-weekly-forecast-rate-cut-bets-fade-in-the-us-and-uk/
2024-02-09 12:41
The median line could attract the USD/CAD pair. The Canadian data should have a big impact today. Taking out the median line activates a larger drop. The USD/CAD price lost traction on Friday amid a weaker Greenback. The pair is trading at 1.3459 at the time of writing. The price corrected after marking a strong rally. The greenback depreciated in the short term even though the ISM Services PMI came in at 53.4 points above 52.0 points on Monday. Yesterday, the US Unemployment Claims came in at 218K in the last week versus the 221K expected compared to 227K in the previous reporting period. However, the USD remains under downside pressure. Today, the Canadian economic data could be decisive. The Employment Change is expected at 16.0K in January, versus 0.1K in December, while the Unemployment Rate could jump from 5.8% in December to 5.8% in January. Poor economic data could help the USD/CAD pair to develop a new bullish momentum. On the contrary, positive data helps the CAD to drag the pair towards new lows. From the technical point of view, the USD/CAD price turned to the downside after failing to reach the weekly R2 of 1.3549. It has dropped far below the R1 (1.3506), but the 1.3449 static support stopped the sell-off. Taking out this downside obstacle activates more declines. The median line (ml) and the pivot point 1.3432 represent potential downside targets. The price confirmed the descending pitchfork after testing and retesting the upper median line (uml). So, the median line could attract the price. A larger downward movement should be activated after a valid breakdown below this dynamic support. On the other hand, failing to reach it may announce a new leg higher. https://www.forexcrunch.com/blog/2024/02/09/usd-cad-price-stalls-losses-ahead-of-employment-data/
2024-02-09 11:24
RBA governor Michele Bullock said there is still a chance the RBA will hike interest rates. Markets now place a 38% likelihood of an RBA hike in February. Expectations for a March Fed cut dropped to 16.5%. Friday’s AUD/USD price analysis revealed bullish momentum, marked by a resilient recovery following a significant dip in the previous session. –Are you interested to learn more about forex options trading? Check our detailed guide- The currency bounced back, fueled by the hawkish remarks of RBA Governor Michele Bullock. Bullock said there is still a chance the RBA will hike interest rates as inflation remains a problem. Moreover, the central bank believes the journey to the 2-3% target is still long. The markets reacted to her hawkish remarks by pushing up bets for a rate hike at the next policy meeting. A week ago, there was nearly no chance that the RBA could hike rates at the February 28th policy meeting. However, markets now place a 38% likelihood of such an outcome. Still, most market participants doubt the possibility of a hike. Meanwhile, economists have adjusted the possible timing of the first rate cut to September. At the same time, the chances of a rate cut in May have dropped from 50% early last week to 20%. A wave of hawkish remarks from major global central banks has dampened expectations for rate cuts. Consequently, some experts like UBS expect the first RBA rate cut as late as November. In the previous session, the pair declined as the dollar strengthened amid declining rate-cut bets. Rate cut expectations declined after unemployment claims data fell more than expected. At the same time, more Fed policymakers, including Thomas Barkin and Susan Collins, made statements suggesting the Fed was in no hurry to cut interest rates. As a result, expectations for a March cut dropped to 16.5%. AUD/USD key events today After Michele Bullock’s speech, the calendar for AUD/USD is empty for today. Therefore, traders will keep digesting the new outlook for RBA and Fed rate cuts. AUD/USD technical price analysis: Price rebounds to challenge 30-SMA resistance On the charts, AUD/USD has recovered to the 30-SMA resistance. However, the bias is bearish because the price is on a downtrend, keeping below the SMA. At the same time, the RSI has mostly stayed in bearish territory below 50. -If you are interested in knowing about scalping forex brokers, then read our guidelines to get started- Therefore, a pullback to the SMA will likely result in a bounce lower. Initially, when the price broke below the 0.6525 support, it pulled back but could not surpass the 30-SMA. Therefore, there is a big likelihood the price will respect the SMA again and fall to the 0.6450 support, a new low. https://www.forexcrunch.com/blog/2024/02/09/aud-usd-price-analysis-aussie-bounces-on-hawkish-rba/
