2024-02-07 08:28
Economic data revealed that Canada’s January Ivey PMI rose to the highest point in 9 months. According to Mcklem, Canada needs high interest rates for longer to lower inflation. Oil prices have risen due to the recent efforts to reduce tensions in the Middle East. The USD/CAD price analysis reveals a bearish outlook as the Canadian dollar stands tall, bolstered by the surge in oil prices. Meanwhile, the US dollar is on shaky ground as Treasury yields fall back from their recent highs. The pair has declined since the previous session due to several factors that supported the Canadian dollar. These factors included upbeat data from Canada, a rise in oil prices, and hawkish remarks from Bank of Canada Governor Macklem. Notably, economic data revealed that Canada’s January Ivey PMI rose to the highest point in 9 months. The rise came as economic activity expanded rapidly. Consequently, investors pushed back bets for BoC rate cuts. Moreover, a speech by BoC governor Macklem on Tuesday showed that the central bank was not in any hurry to cut interest rates. According to him, Canada needed high interest rates for longer to lower inflation. Additionally, he noted that Canada’s economy was vulnerable to volatility in oil prices due to tensions in the Middle East. This could have a significant impact on inflation in the country. Meanwhile, oil prices have risen due to the recent efforts to ease tensions in the Middle East. Investors are keenly watching and waiting to see the outcome of diplomatic efforts to stop the Gaza war. USD/CAD key events today Investors will keep watching developments in the Middle East as there won’t be any major economic releases today. USD/CAD technical price analysis: Retreat from 1.3525 barrier On the technical side, USD/CAD has pulled back sharply after attempting to break above the 1.3525 key resistance level. However, the bullish bias is still strong because the pullback is above the 30-SMA. Additionally, the RSI is in bullish territory. Therefore, the decline might pause at the nearest support level. Currently, the price is heading for a solid support zone comprising the 30-SMA and the 0.5 Fib retracement level. At this point, the bulls are likely waiting to make another swing high. However, there is a chance the 1.3525 resistance will hold firm. In that case, the price might fall back to the 1.3375 support. https://www.forexcrunch.com/blog/2024/02/07/usd-cad-price-analysis-canadian-dollar-gains-amidst-oil-rally/
2024-02-06 13:13
A new lower low in EUR/USD price could activate more declines. False breakdowns could signal a new leg higher. 07 psychological level stands as a potential target. The EUR/USD price slumped after the US Non-Farm Payrolls, Average Hourly Earnings, Unemployment Rate, and Revised UoM Consumer Sentiment came in better than expected on Friday. The price is trading at 1.0736 at the time of writing, above yesterday’s low of 1.0723. The DXY’s strong rally boosted the greenback. Still, we cannot exclude the probability of an upside retracement. The downside pressure remains high as the US ISM Services PMI came in at 53.4 points, above the 52.0 points expected yesterday. On the other hand, the German Trade Balance and German Final Services PMI came in better than expected, while the Eurozone PPI and Final Services PMI matched expectations. Today, the Eurozone Retail Sales reported a 1.1% drop versus the 0.9% drop expected, while the German Factory Orders rose by 8.9% even if the traders expected a 0.1% drop. Today, the FOMC Member Mester Speaks and the BOC Gov Macklem remarks could move the markets. From the technical point of view, the bias remains bearish despite temporary rebounds. The sell-off was paused by the major descending pitchfork’s median line (ML) and by the 1.0723 level. Only false breakdowns may announce exhausted sellers and could signal a larger rebound. A new higher high, jumping and closing above today’s high of 1.0762, confirms more gains. On the contrary, staying near the downside obstacles may announce an imminent breakdown. A new lower low and making a valid breakdown below the median line activates more declines. If the price drops, the S2 (1.0703) and the 1.07 psychological level are potential downside targets. https://www.forexcrunch.com/blog/2024/02/06/eur-usd-price-pauses-downside-amid-oversold-conditions/
2024-02-06 09:46
The RBA followed the path of the Federal Reserve, pushing back on rate cut expectations. The RBA said it needed more convincing that inflation was falling. The Aussie strengthened due to a rally in Chinese equities. Tuesday’s AUD/USD price analysis showed a bullish recovery as investors absorbed hawkish signals from the RBA. Despite the central bank maintaining interest rates, the focus was on its emphasis on the potential for rate hikes. The RBA followed the path of the Federal Reserve, pushing back on rate cut expectations. Recently, major central banks have been saying it’s too early to consider rate cuts as inflation remains high. On Sunday, Fed Chair Powell said the central bank was still not convinced inflation was on a downtrend. However, the situation in Australia is a bit different. The economy is slowing down, and inflation eased in the fourth quarter. Still, on Tuesday, the RBA said it needed more convincing that inflation is falling. Therefore, it is still possible that the bank will hike rates. Consequently, investors moved the timing of the first RBA rate cut from August to September. RBA rate hikes started in May 2022, increasing interest rates by 425bps. The high rates have worked to lower demand in Australia’s economy, leading to a decline in inflation from 7.8% to 4.1% in Q4. However, the value is still above the bank’s target of 2%. Furthermore, the Aussie strengthened with the Yuan due to a rally in Chinese equities. Stocks in China posted record gains on Tuesday as authorities looked to support the weak markets. This also led to a rise in the Yuan. AUD/USD key events today The RBA policy meeting closed the major events calendar for the day. Consequently, the pair will likely keep absorbing the central bank’s message. AUD/USD technical price analysis: Downtrend pauses for a temporary pullback. On the charts, AUD/USD is recovering after plunging below the 0.6525 key support level. However, the recovery comes in a bearish trend because the price is below the 30-SMA and the RSI is below 50. Therefore, it might not go beyond the 30-SMA resistance. The recent plunge came after the price made a bearish engulfing candle at the 0.6600 key resistance level. Consequently, bears broke below the 0.6525 support to make a lower low. This new low confirmed the continuation of the bearish trend. Therefore, bears are likely waiting at 0.6525 to resume the downtrend. https://www.forexcrunch.com/blog/2024/02/06/aud-usd-price-analysis-aussie-gains-ground-on-hawkish-rba/
2024-02-06 08:49
Robust economic indicators affirmed the strength of the US economy. There was a surge in business activity in the US services sector. Powell said rate cuts would be delayed until there was a clear indication that inflation was dropping. In the GBP/USD outlook, the narrative unfolds with a bearish tone. Fueled by positive data, the dollar’s surge has cast a shadow over the pound. Monday witnessed a persistent downturn in the value of the pound as robust economic indicators affirmed the strength of the US economy. Recent data from the US, including Friday’s jobs report, have led to a decline in expectations for early rate cuts in the US. As a result, the dollar has soared, putting pressure on the pound. The decline in the currency finally pushed it out of consolidation. Therefore, if the dollar rally continues, this might start a bear market for the pair. Initially, the pound had strengthened as investors had expected earlier rate cuts in the US compared to the UK. However, that narrative has changed as the US plans to delay rate cuts. On Monday, data from the US showed a surge in business activity in the services sector. Notably, the ISM non-manufacturing PMI recorded another month of expansion. Furthermore, on Sunday, Powell said rate cuts would be delayed until there was a clear indication that inflation would fall to the 2% target. These remarks contributed to a surge in the dollar and Treasury yields. In the UK, the Bank of England maintained interest rates last week. However, policymakers signaled the possibility of cutting rates if inflation drops as expected. GBP/USD key events today Traders do not expect any major economic reports from the UK or the US today. Therefore, they will keep digesting recent reports. GBP/USD technical outlook: Solid bearish momentum ends price consolidation On the technical side, the pound has plummeted from the 1.2760 key resistance level to the 1.414 fib extension level. The decline saw the price break below the key 1.2600 support level, indicating solid bearish momentum. For a long time, the price has traded between the 1.2760 resistance level and the 1.2600 support. Therefore, the solid bearish momentum has finally pushed the price out of this consolidation area. Moreover, this might be the beginning of a bearish trend. Currently, the price has paused at the 1.414 fib level and might pull back to retest the 1.2600 level before the downtrend continues. https://www.forexcrunch.com/blog/2024/02/06/gbp-usd-outlook-pound-plunges-amid-dollars-resurgence/
2024-02-01 09:07
Powell challenged market expectations, shattering hopes for an early Fed rate cut in March. Investors were eagerly awaiting the BoE policy meeting later today. The pound remains one of the best performers against the dollar this year in the G10. The GBP/USD forecast revealed a bearish outlook as the pound lost its strength, succumbing to the relentless rally of the dollar. The FOMC policy meeting the day before saw Powell challenging market expectations, shattering hopes for an early Fed rate cut in March. Moreover, investors were eagerly awaiting the BoE policy meeting later today. The Fed maintained its interest rates yesterday. Moreover, Powell stated they would not start cutting rates until they were confident inflation was declining to the 2% target. Consequently, bets for a March rate cut fell to 38% from 59% before the policy meeting. Meanwhile, investors will look for hints on when interest rates in the UK will start falling at today’s BoE policy meeting. Notably, the pound remains one of the best performers against the dollar this year in the G10. Britain’s economy has recovered this year, and inflation remains relatively high. The PMI report from S&P Global released earlier in the year showed business activity at the highest level in seven months. Therefore, the BoE will likely keep interest rates unchanged. Additionally, investors expect the first rate cut to come in June. Notably, after the December UK inflation figures, markets reduced expectations on the number of BoE rate cuts this year from 125 to 100 basis points. There has been no guidance from BoE policymakers on the possible outcome of the policy meeting today. Therefore, analysts believe Thursday’s decision and messaging could cause a lot of volatility in the pair. GBP/USD key events today BoE monetary policy meeting BoE Gov Bailey speaks US unemployment claims ISM manufacturing PMI GBP/USD technical forecast: Price declines in a bearish channel The pound is declining in a bearish channel on the charts after failing to go beyond the 1.2760 key resistance level. Moreover, indicators on the chart support a bearish bias as the 30-SMA is above the price while the RSI is in bearish territory below 50. The price has fallen to retest the channel support. At this support, bulls might emerge to retest the channel resistance before the decline continues. However, if bearish momentum is strong, the price might break through the channel support to retest the 1.2600 key support level. https://www.forexcrunch.com/blog/2024/02/01/gbp-usd-forecast-powell-dims-march-rate-cut-prospects/
2024-01-31 10:49
Escaping from the Falling Wedge pattern signaled a EUR/USD price reversal. The FOMC and the US economic figures should bring high volatility. Only a new higher high activates a larger rebound. The EUR/USD price dropped as low as 1.0795 on Monday, where it found strong demand again. Its failure to stay below the 1.0800 psychological level shows sellers’ exhaustion. After such a fall, an up-retracement is highly probable. Still, the fundamentals remain the key drivers today. In the short term, the price dropped slightly as the US CB Consumer Confidence was reported at 114.8 points, above 114.2 expected and compared to 108.0 points in the previous reporting period. Meanwhile, JOLTS Job Openings came in at 9.03M, even though the traders expected a potential drop to 8.73 M. The Federal Reserve is expected to keep the Federal Funds Rate at 5.50%, but the FOMC Press Conference and FOMC Statement could change the sentiment. Furthermore, the US is to release the ADP Non-Farm Employment Change which could drop from 164K to 148K, and the Employment Cost Index, which could report a 1.0% growth after a 1.1% growth in the previous reporting period. Also, the German Prelim CPI could have an impact as well. As you can see on the hourly chart, the EUR/USD price jumped above the downtrend line signaling that the downward movement could be over. The false breakdown below the Falling Wedge’s support and through the weekly S1 of 1.0799 confirmed exhausted sellers. Now, it has tried again to retest the broken downtrend line before jumping higher. After the last rebound, the rate returned once again to retest the buyers. I think the EUR/USD pair could give birth to a new swing higher as long as it stays above the 1.08 psychological level. Still, only a new higher high validates a border rebound. https://www.forexcrunch.com/blog/2024/01/31/eur-usd-price-remains-with-shallow-upside-ahead-of-fomc/
