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/
2024-02-09 08:45
The yen weakened as markets lowered expectations for aggressive BoJ rate hikes. The dollar held on to gains made on Thursday. The likelihood of a Fed rate cut in March has fallen to 16.5%. The USD/JPY outlook was bullish as the currency pair ascended to a 10-week high, propelled by a resilient dollar and a weakening yen. The yen weakened as markets lowered expectations for aggressive rate hikes by the Bank of Japan starting as early as March. On the other hand, the dollar held on to gains made on Thursday after an upbeat employment report. Yen’s weakness is back because the market overestimated the pace and size of rate hikes after a BoJ policy shift. BoJ policymakers have recently pushed back on these expectations, saying the shift might be slower than previously thought. On Thursday, BoJ deputy governor Uchida dismissed expectations that the central bank would aggressively raise interest rates. Moreover, on Friday, BoJ governor Ueda said that monetary conditions will likely remain easy even as the bank shifts to rate hikes. As the yen falls, $152 is becoming a target once again. Therefore, Japanese authorities may start warning of a possible intervention. Notably, Japan’s Finance Minister Suzuki said on Friday morning that he was closely watching currency moves. Meanwhile, the dollar was heading for a fourth week of gains as data from the US continued pointing to a strong economy. US initial jobless claims fell more than expected last week, indicating labor market strength. By Friday, the likelihood of a Fed rate cut in March had fallen to 16.5%, down from 65.9% a month ago. USD/JPY key events today There won’t be any high-impact economic reports from the US or Japan today. Therefore, it might lead to thin trading for the pair. USD/JPY technical outlook: Bullish momentum shatters 148.51 resistance level On the technical side, USD/JPY has broken above the 148.51 resistance level, indicating a bullish momentum surge. This has aligned conditions for a bullish trend. First, the price has made a higher low and high. Second, it has respected the 30-SMA as support. Finally, the RSI trades near the overbought level, showing solid bullish momentum. However, the price might soon pull back as it approaches a solid resistance zone. Just above the current price level lies the 1.27 fib extension and the 150.00 key levels. This resistance zone might temporarily pause the rally. https://www.forexcrunch.com/blog/2024/02/09/usd-jpy-outlook-pair-hits-10-week-high-on-yen-weakness/
2024-02-08 12:48
Taking out 1.0784 activates more gains. The lower median line (LML) represents a dynamic support. The US Unemployment Claims could bring high action. The EUR/USD price dropped like a rock on Thursday, trading at 1.0762 at the press time. It climbed as high as 1.0788 today, where it found resistance. Yesterday, the German Industrial Production reported a 1.6% drop versus the 0.4% drop expected, while the US Trade Balance came in at -62.2B versus -62.0B expected. Today, the US economic data could bring some action. The Unemployment Claims indicator could drop from 224K to 221K in the last week. This situation may help the Greenback appreciate versus its rivals. In addition, the Final Wholesale Inventory is expected to report a 0.4% growth for the second month in December. Also, the FOMC Member Barkin Speaks could have an impact in the short term. Tomorrow, the German Final CPI may report a 0.2% growth. Furthermore, the Canadian Employment Change and Unemployment Rate could move the USD. From the technical point of view, the EUR/USD price turned to the downside after failing to take out the 1.0784 static resistance. The false breakouts announced exhausted buyers. Now, it could approach the ascending pitchfork’s lower median line (LML), representing dynamic support. The price could still extend its rebound despite minor retreats as long as it stays above it. The S1 of 1.0745 stands as a static support. Testing the lower median line and registering only false breakdowns signals a new bullish momentum. A bullish closure above 1.0784 opens the door for more gains. A new higher high, removing the immediate downside obstacles, should announce more declines. https://www.forexcrunch.com/blog/2024/02/08/eur-usd-price-sellers-dominate-before-unemployment-claims/
2024-02-08 10:12
Several policymakers gave reasons why there was no hurry to lower interest rates. Oil prices rose due to signs that Middle East tensions will likely continue. Canada’s economy recorded a surprise deficit in January as exports fell and imports rose. Thursday’s USD/CAD outlook was slightly bullish as the US dollar strengthened after policymakers continued to push back on rate cut expectations. Fed policymakers have recently said they would prefer to hold off on rate cuts until there is confidence that inflation will reach the 2% target. On Wednesday, several policymakers gave reasons why there was no hurry to lower interest rates. Moreover, the US economy’s resilience has shown that there is still a need for high interest rates. Meanwhile, the Canadian dollar was also steady, holding near recent highs due to a rise in oil prices. Oil prices rose due to signs that Middle East tensions will likely continue. Notably, Israel turned down Hama’s appeal to end the war. The Canadian dollar will keep strengthening as long as oil prices keep rising. Elsewhere, data on Wednesday revealed that Canada’s economy recorded a surprise deficit in January as exports fell and imports rose. This was the first monthly deficit since July. Meanwhile, Bank of Canada policy meeting minutes published on Wednesday showed that policymakers were concerned that inflation remained persistent. Therefore, the bank will likely hold off on cutting interest rates. Moreover, the BoC is worried about shelter inflation. If Canada’s housing market recovers more than expected in 2024, it might keep overall inflation high. USD/CAD key events today US initial jobless claims. USD/CAD technical outlook: Decline takes a breather at 0.5 fib retracement On the charts, the USD/CAD price has fallen below the 30-SMA, showing a possible shift in sentiment to bearish. At the same time, the RSI is now trading in bearish territory below 50. However, the decline has paused at the 0.5 Fib retracement level, a key support and resistance level. Consequently, bulls have emerged at this level and might push the price back above the SMA. If this happens, the price will likely climb to retest the 1.3525 resistance level. A break above this level would make a higher high and start a bullish trend. On the other hand, if the price breaks below the fib level, it will likely continue falling to the 1.3375 support level. https://www.forexcrunch.com/blog/2024/02/08/usd-cad-outlook-us-dollar-rises-as-rate-cut-bets-fade/
