2024-01-30 10:29

Traders reduced the likelihood of the Fed lowering rates in March from 89% a month ago to 48%. Discussions among ECB policymakers on Monday revealed disagreements on the timing of rate cuts. Traders are fully pricing in an ECB rate cut in April. Tuesday’s EUR/USD price analysis revealed a bearish sentiment as investors braced for the possibility that the Fed might push back on expectations of an early rate cut. The Fed will end its policy meeting on Wednesday. Notably, the likelihood of the Fed lowering rates in March fell from 89% a month ago to 48% as the US economy remained robust. In contrast, there is a less favorable economic outlook for European countries, making the euro less attractive. Helen Given, an FX trader at Monex USA in Washington, remarked, “The macro picture in the US looks a lot better than the macro picture in European Union countries and the eurozone in general.” Tomorrow, investors will closely monitor comments from Fed Chairman Jerome Powell. Powell had indicated in December that the Fed is shifting towards a cycle of rate cuts. Meanwhile, the ECB kept interest rates at a record-high 4% on Thursday, emphasizing its commitment to fight inflation. Discussions among ECB policymakers on Monday revealed disagreements on the timing for potential rate cuts. ECB policymaker Peter Kazimir expressed in a blog post, “The next move will be a cut, and it is within our reach.” He emphasized that the precise timing, whether in April or June, is less important. Meanwhile, Mario Centeno, Portugal’s central bank governor, preferred earlier action, stating that it would enable the ECB to implement changes more gradually. Traders are now fully pricing in a move in April. EUR/USD key events today The US CB Consumer Confidence report The US JOLTS Job Openings report EUR/USD technical price analysis: Price reaches crucial 1.0800 support On the charts, the pair has finally touched the 1.0800 support level. However, the decline from the 1.0900 key resistance level was slow and shallow, indicating that bears had weakened. Moreover, weakness can be seen in the RSI, which has made higher lows while the price declines. Therefore, there is a bullish divergence that might lead to a reversal in the trend. For bulls to take over, the price must break above the 30-SMA and the 1.0900 to start making higher highs and lows. However, if the bearish bias persists, the price might break below the 1.0800 support. https://www.forexcrunch.com/blog/2024/01/30/eur-usd-price-analysis-feds-resistance-to-cut-bets-looms/

2024-01-30 09:59

Australia’s retail sales fell in December after a big surge the previous month. There is a 70% probability of an RBA rate cut in August. The US Department of Labor Statistics will release data on job openings later on Tuesday. Tuesday’s AUD/USD outlook leans towards a bearish tilt following the revelation of a dip in Australia’s retail sales for December, retracting from the previous month’s surge. As a result, this downturn has heightened investor confidence that the RBA is unlikely to implement a rate hike next week. Additionally, there is a 70% probability of an RBA rate cut in August. Meanwhile, investors are awaiting the highly anticipated four-quarter inflation report coming on Wednesday. Economists predict that headline consumer inflation might drop to a two-year low of 4.3%. On the other hand, the US dollar was mostly flat ahead of employment data and the Fed’s monetary policy decision tomorrow. Traders will look for insights into potential rate cuts by the US central bank. The US will release job openings data later on Tuesday, giving a preview of the upcoming payroll report on Friday. Meanwhile, tomorrow, the Fed will likely keep interest rates unchanged. However, everyone will focus on the messaging by Fed Chair Jerome Powell in Wednesday’s press conference. Markets are currently pricing in a 46.6% chance of the US central bank starting rate cuts in March, down from 73.4% a month ago. This shift came after data showed that the US economy remains resilient. AUD/USD key events today US CB Consumer Confidence US JOLTS Job Openings AUD/USD technical outlook: Price trades in a tight range On the technical side, AUD/USD is trapped in consolidation, with the nearest support at 0.6550 and the nearest resistance at 0.6625. The ranging market came after a strong bearish trend that failed to go below the 0.6550 support level. Consequently, the price pulled back to the 30-SMA. At this point, the price confirmed a range by chopping through the SMA. Similarly, the RSI started chopping through the pivotal 50 level. If this consolidation is a pause in the downtrend, then the price will likely soon break below the range support and the 0.6550 support level. On the other hand, the trend will reverse to bullish if the price breaks above the 0.6625 resistance level. https://www.forexcrunch.com/blog/2024/01/30/aud-usd-outlook-australias-sales-dip-following-nov-surge/

2024-01-29 14:31

The bias remains bullish as the DXY rallies. A new lower low activates a sell-off. The FOMC is seen as the most important event of the week. The USD/JPY price remains bullish despite minor retreats. The pair is trading at 147.98 at the time of writing and is struggling to extend its growth amid the dollar’s lack of conviction. The Greenback’s further growth should help the pair gain meaningful traction. The Japanese Tokyo Core CPI came in worse than expected on Friday, while SPPI matched expectations. On the other hand, the US Pending Home Sales and Personal Spending beat expectations, while Personal Income and Core PCE Price Index came in line with expectations. Today, the price could be driven by technical factors as we don’t have important economic events. Tomorrow, the Japanese Unemployment Rate could remain steady at 2.5%. The US is to release high-impact data, such as the CB Consumer Confidence which is expected to jump from 110.7 to 113.9 points, and the JOLTS Job Openings. The FOMC represents the most important event of the week. The FED is expected to retain the policy rates on Wednesday, but the FOMC Press Conference may trigger the volatility. From the technical point of view, the USD/JPY price turned to the upside in the short term, erasing some of the previous losses. Still, the rebound could be only temporary as the price could only retest the immediate supply zones or the resistance levels before going down. The pair remains trapped between the inside sliding lines (sl, sl1). Its failure to retest the median line (ml) announced exhausted buyers. The rebound may represent a flag pattern, signalling a new leg down. Coming back below the weekly pivot point of 147.82 and making a new lower low activates a new sell-off towards the sliding line (sl). https://www.forexcrunch.com/blog/2024/01/29/usd-jpy-price-wobbling-at-148-0-on-a-thin-trading-day/

2024-01-29 09:56

The Canadian dollar benefited from higher oil prices. USD/CAD recorded a weekly rise due to the Bank of Canada’s recent shift in guidance The Fed will announce its interest rate decision on Wednesday. Monday saw a bearish turn in the USD/CAD outlook, driven by the surge in oil prices triggered by a drone strike on US forces in Jordan. This event escalated worries about potential supply disruptions in the Middle East. Notably, the Canadian dollar benefits from higher oil prices because Canada is a net oil exporter. The pair saw a slight decline on Friday. However, it recorded a weekly gain. Investors digested the Bank of Canada’s recent shift in guidance, anticipating increased volatility for the Canadian dollar. Notably, Bank of Canada officials said they were considering when to cut borrowing costs rather than thinking of further rate hikes. In domestic data, a preliminary estimate revealed a 0.8% increase in Canada’s wholesale trade in December compared to November. Meanwhile, the Federal Reserve will announce its interest rate decision on Wednesday. December saw a marginal rise in US prices. However, the annual inflation increase stayed below 3% for the third consecutive month. This reinforced expectations that the Federal Reserve would initiate interest rate cuts this year. Still, the timing of the anticipated rate cut remains uncertain. Additionally, the Friday report indicated a surge in consumer spending at the end of 2023 as Americans indulged in goods and services during the holidays. USD/CAD key events today Investors do not expect key events from Canada or the US on Monday. As a result, investors will likely focus on developments in the Middle East. USD/CAD technical outlook: Bears strive to breach the 1.3425 support barrier On the charts, bears are attempting to breach the 1.3425 support level. This bearish move comes after the price made a double-top pattern and a bearish divergence. Meanwhile, the double top came when the bullish trend paused at the 1.3525 key resistance level. At the same time, the RSI confirmed that bulls were exhausted when it made a lower high. Consequently, bears took over by breaching the 30-SMA support line. However, the price must now break below the 1.3425 support level to make a lower low and confirm a bearish reversal. Otherwise, it will keep consolidating between the 1.3525 resistance and the 1.3425 support. https://www.forexcrunch.com/blog/2024/01/29/usd-cad-outlook-middle-east-tensions-lift-oil-price-loonie/

2024-01-29 08:33

Elevated geopolitical tensions in the Middle East dampened risk sentiment. Recent data indicated a moderate increase in US prices for December. The US Federal Reserve will most likely keep rates unchanged on Tuesday. Today’s EUR/USD forecast revealed a subtle bearish tilt. The dollar held steady as investors carefully evaluated crucial US economic data ahead of the eagerly anticipated Fed policy meeting. At the same time, an undercurrent of elevated geopolitical tensions in the Middle East dampened risk sentiment, further supporting the dollar. Recent data indicated a moderate increase in US prices for December, keeping the annual inflation rise below 3% for a third consecutive month. As a result, it reinforced the prevailing anticipation of potential rate cuts later in the year. Meanwhile, this week, investors will focus on the Fed’s two-day policy meeting starting on Tuesday. The central bank will most likely keep rates unchanged. Therefore, the focus will be on the comments of Fed Chair Jerome Powell. Elsewhere, traders bet heavily on Thursday that the ECB would start cutting rates in April. They believe policymakers are more comfortable with the inflation outlook. Notably, the ECB failed to mention that domestic price pressures remain elevated. As a result of this omission, markets believe that the ECB is increasingly convinced that inflation is slowing down. Meanwhile, a survey on Friday revealed that there will be a downturn in German consumer sentiment for February, as households remain concerned amid the economic uncertainty. This setback dashed any hopes of a recovery for Europe’s largest economy following a slight rebound at the beginning of the year. EUR/USD key events today It will likely be a slow day for the pair as no high-impact events are scheduled for today. EUR/USD technical forecast: RSI bullish divergence On the technical side, the bias for EUR/USD is bearish. The price has made lower lows and highs and is trading below the 30-SMA. At the same time, the RSI is below 50, indicating strong bearish momentum. Moreover, the price currently trades with the nearest resistance at 1.0900 and the nearest support at 1.0800. However, the current bearish move might be nearing its end as the RSI has made a bullish divergence. Therefore, the trend might reverse if bulls break above the 30-SMA and the 1.0900 resistance. https://www.forexcrunch.com/blog/2024/01/29/eur-usd-forecast-firm-dollar-casting-shadows-ahead-of-fomc/

2024-01-27 17:05

Traders pushed back bets for rate cuts in the UK and the US. US GDP figures came in higher than expected, indicating strong economic performance. Market participants expect the BoE to maintain rates next week. The GBP/USD weekly forecast is neutral as the resilience of both the US and UK economies creates a level playing field for the currency. Ups and downs of GBP/USD The pound ended the week flat, with the UK and the US economies showing resilience. Business activity in the manufacturing and services sectors for both countries rose. As a result, traders pushed back bets for rate cuts in the UK and the US. More data from the US supported the view that Fed rate cuts will not start in March. GDP figures came in higher than expected, indicating strong economic performance. Meanwhile, the Fed’s preferred inflation measure came in line with expectations. Next week’s key events for GBP/USD Next week, major reports from the US will include the FOMC meeting minutes, the ISM manufacturing PMI, and the employment report. Meanwhile, traders will pay close attention to the Bank of England policy meeting in the UK. On February 1, the BoE will likely maintain interest rates at 5.25%. At the same time, investors will closely monitor any indications regarding the timing of potential rate cuts. Meanwhile, there will be clues on possible Fed rate cuts in the FOMC meeting minutes and the NFP report. Another upbeat employment report could further reduce rate-cut bets, leading to a decline in the pair. The opposite is also true. GBP/USD weekly technical forecast: Bullish momentum weakens near 1.2800 The pound is consolidating in a tight range with support at 1.2600 and resistance at 1.2800. The bullish trend slowly weakened when the price neared 1.2800. The price started sticking close to the 22-SMA until it started chopping through the line. This indicates a shift from a trending to a ranging market. If this is a pause in the bullish trend, the price will eventually break above the range resistance to continue higher. However, there are indications that bears might take over. The RSI has made a bearish divergence with the price, showing weaker bullish momentum. Therefore, if bulls fail to regain momentum, bears might break below the range support to start a new downtrend. https://www.forexcrunch.com/blog/2024/01/27/gbp-usd-weekly-forecast-us-uk-economies-display-resilience/