2024-02-13 10:24

Fed policymakers have emphasized the need for evidence of a sustained downtrend in inflation. A decline in US inflation would lead to a surge in rate-cut expectations. Markets are pricing in an almost 33% chance that the BoJ will hike rates by 10-bps next month. The USD/JPY price analysis showed a bullish landscape on Tuesday as the dollar rose ahead of the US inflation report. Meanwhile, the yen continued its decline after BoJ policymakers pushed back expectations for an aggressive shift in policy. As a result, the pair is quickly approaching $150. The inflation report will show whether high interest rates reduce price growth. Recently, Fed policymakers have emphasized the need for evidence of a sustained downtrend in inflation. A sustained downtrend would mean that when inflation reaches the 2% target, it will stay around that level. The Fed would then be confident enough to cut rates. Therefore, if the report shows a decline in inflation, it would lead to a surge in rate cut expectations. On the other hand, if inflation comes in higher than expected, the Fed would be more reluctant to cut rates. Therefore, the dollar would surge, pushing USD/JPY beyond the 150 level. Meanwhile, the yen has weakened as investors speculate on a looming BoJ policy shift. Policymakers have recently pushed back market expectations that the central bank will implement rapid rate hikes. Moreover, there is a chance that easy monetary conditions will remain. However, Japan’s economy is growing, and demand pushes inflation. Consequently, markets are pricing in an almost 33% chance that the BoJ will hike rates by 10-bps next month. USD/JPY key events today US Consumer Price Index (CPI) Report USD/JPY technical price analysis: Bulls make strides toward 150.00 resistance On the technical side, the USD/JPY pair is in a solid bullish trend, with the price consistently making new highs. Moreover, the price has kept above the 30-SMA with the RSI above 50, supporting a bullish trend. The price recently broke above the 148.51 resistance level and made a new high before pulling back to retest its support trendline. Currently, bulls are making a new leg with targets at the 150.00 resistance level. However, the price action shows that the bulls have weakened. The current swing has much smaller candles compared to previous bullish swings. This indicates that bulls are less enthusiastic about pushing the price higher. Therefore, the price might pause at the 150.00 resistance. https://www.forexcrunch.com/blog/2024/02/13/usd-jpy-price-analysis-yen-slips-as-focus-shifts-to-us-cpi/

2024-02-13 08:46

The dollar strengthened ahead of the US consumer inflation report. The Australian dollar was steady after mixed economic reports. A report on consumer confidence in Australia showed a rebound in February. On Tuesday, the AUD/USD outlook leaned towards bearish territory as the dollar surged in anticipation of the upcoming US inflation report. Meanwhile, the Australian dollar was steady after mixed economic reports. The inflation report carries much weight because it greatly impacts the Fed’s policy outlook. Moreover, it will affect market bets for rate cuts. At the moment, experts believe the figure will show a decline in inflation, in line with the recent downtrend. Such an outcome will likely boost rate-cut bets, leading to a decline in the dollar. Consequently, the AUD/USD pair would rally. On the other hand, the pair would plunge if the figure beats forecasts. In Australia, a report on consumer confidence showed a rebound in February. Consumers are more confident as inflation drops that rates have peaked. As a result, there is more spending in the economy. Australia’s inflation fell to 4.1% in Q4 as high interest rates slowed the economy. Although the RBA has hinted at the possibility of another rate hike, markets believe the next move will be a cut. Meanwhile, another report revealed softer business conditions in Australia in January. This came from a slowdown in the services sector, which drives a large part of the economy. Despite the slowdown in inflation and the economy, the RBA repeated on Tuesday that inflation was still too high. Therefore, it will take time for it to return to the 2% target. AUD/USD key events today US Core CPI m/m US CPI m/m US CPI y/y AUD/USD technical outlook: New bullish momentum faces tough resistance On the technical side, AUD/USD has declined to the 30-SMA support after retesting the 0.6540 resistance level. Initially, the price was in a downtrend, respecting the 30-SMA as resistance until it paused at the 0.6480 support level. At this point, bulls emerged, triggering a break above the 30-SMA resistance. Consequently, there was a shift in sentiment from bearish to bullish. However, the new bullish move has met a strong resistance zone comprising the 0.6540 and 0.5 Fib retracement levels. Bears will resume the downtrend if this zone holds firm. However, if the price eventually breaks above, it could start a bullish trend. https://www.forexcrunch.com/blog/2024/02/13/aud-usd-outlook-dollar-firms-as-us-inflation-report-looms/

2024-02-12 14:38

The downside pressure on the GBP/USD price is high after registering false breakouts. The US inflation figures should move the rate tomorrow. The lower median line (LML) could attract the rate. The GBP/USD price climbed as high as 1.2654 today, meeting strong resistance. The pair has turned to the downside and is trading at 1.2616. The downside pressure is high in the short term amid broad dollar strength. The greenback dominates the currency market ahead of US inflation figures. The Consumer Price Index m/m is expected to report 0.2% growth in January versus 0.3% growth in December. CPI y/y may result in only a 2.9% growth, less compared to the 3.4% growth in the previous reporting period, while the Core CPI could report a 0.3% growth again. These represent high-impact events, so the volatility should be huge. The GBP/USD pair could register sharp movements in both directions. Lower inflation may weaken the greenback, as the FED could start cutting the Federal Funds Rate sooner. On the contrary, higher inflation should boost the USD. Furthermore, the UK will release important economic data as well tomorrow. Claimant Count Change could be reported at 15.2K, above 11.7K in the previous reporting period. The average Earnings Index may register 5.6% growth, while the Unemployment Rate is expected to drop to 4.0% from 4.2%. The GBP/USD price retested the 50% Fibonacci line of the ascending pitchfork. However, it registered only false breakouts and has turned to the downside. The breakout above 1.2641 was also invalidated, confirming buyers’ exhaustion. Now, it could approach the weekly pivot point of 1.2595, which stands as static support. Failing to approach the median line (ml) indicated a potential sell-off towards the lower median line (LML). https://www.forexcrunch.com/blog/2024/02/12/gbp-usd-price-aiming-to-break-1-26-focus-on-us-cpi/

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/