2025-01-10 09:19
Sterling wallowed near recent lows amid turmoil in the UK debt market. Markets are only pricing 40-bps of Fed rate cuts this year. Economists expect US jobs to increase by 160,000 in December. The GBP/USD outlook is extremely bearish, pushing the pound to a 14-month low as the UK bonds market slumps. On the other hand, the dollar was heading for a sixth week of gains due to a rally in US Treasury yields and anticipation of another upbeat US employment report. Sterling wallowed near recent lows amid turmoil in the UK debt market. The panic comes at a time when investors are worried about the UK economy due to the prospects of increased government spending and higher taxes. Data in the latter part of 2024 revealed a slowdown in the UK economy that increased bets for BoE rate cuts. Initially, economists had expected better performance under the new government. However, it has yet to materialize. As a result, traders are worried about the future, especially with Trump as the new US president. Meanwhile, the greenback continued its recent rally as Treasury yields soared. Recent economic data has shown resilience in the US economy, which has led to a drop in Fed rate cut expectations. Markets are now only pricing 40-bps of cuts this year, giving the dollar an edge over its peers. The next major report is the nonfarm payrolls. Economists expect jobs to increase by 160,000 in December, a slowdown from the previous month. On the other hand, the unemployment rate might hold steady at 4.2%. GBP/USD key events today US average hourly earnings m/m US nonfarm employment change US unemployment rate GBP/USD technical outlook: Bears stall at 1.2250 support On the technical side, the GBP/USD price has paused near the 1.2250 support level. Bears have made a new low, confirming a continuation of the downtrend. However, there are signs that this downtrend might not continue for too long. First, bulls have shown attempts to reverse the trend by breaching the 30-SMA resistance. Although bears eventually resumed the downtrend, it is a sign that bulls are getting stronger. Second, the RSI has made a slight bullish divergence. The price has made a lower low, but the indicator has made a higher, signaling fading bearish momentum. The Bulls may retest the 30-SMA and the 1.2400 key level if the divergence plays out. A break above would confirm a shift in sentiment. Otherwise, the downtrend will continue. https://www.forexcrunch.com/blog/2025/01/10/gbp-usd-outlook-tests14-month-low-as-uk-bonds-slump/
2025-01-09 11:14
Japan’s consumer sentiment deteriorated in December. Trump might declare a national emergency to facilitate his tariff program. Private employment growth in the US was slow in December. The USD/JPY outlook shows uncertainty regarding Bank of Japan rate hikes that have kept most traders on the sidelines. Moreover, the pair has maintained a sideways move ahead of the crucial US nonfarm payrolls report. Wednesday’s data revealed Japan’s consumer sentiment deteriorated in December, lowering expectations for BoJ rate hikes. Bank of Japan policymakers have been cautious since late last year due to uncertainties about US policies. However, they have monitored local economic data for signs of improving consumption and price pressures. The central bank is waiting for signs that inflation will sustainably reach the 2% target. Therefore, downbeat data lowers the likelihood of a near-term rate hike. On the other hand, former BoJ chief Haruriko Kurada said the central bank will keep hiking interest rates since inflation is on a path to the 2% target. A rate hike will likely revive the yen, which has suffered under a strong dollar. The US dollar strengthened on Wednesday after reports that Trump might declare a national emergency to facilitate his tariff program. Tariffs on imported goods will boost the economy and increase price pressures. Meanwhile, data revealed that private employment growth was slow in December. However, unemployment claims fell further last week. USD/JPY key events today Market participants do not expect high-impact reports from Japan or the US today. However, the upcoming nonfarm payrolls report will likely increase volatility. USD/JPY technical outlook: Bulls fading near 158.02 resistance On the technical side, the USD/JPY price remains in its tight range, with the nearest resistance at 158.02 and the nearest support at 156.03. Although bulls are struggling to make higher highs, the RSI is trending down with lower highs. This is a sign that bullish momentum is fading. Therefore, bears might be preparing to take charge. If the divergence plays out, the price will break below the 30-SMA and likely break out of the range. Such an outcome would signal a reversal, allowing USD/JPY to revisit lower support levels like 153.02. However, if there is a resurgence in bullish momentum, the price might break above 158.02 to make a new high and continue the previous bullish trend. https://www.forexcrunch.com/blog/2025/01/09/usd-jpy-outlook-markets-anxious-ahead-of-us-nfp-boj-hikes/
2025-01-09 09:52
Trump is considering emergency measures to facilitate a new tariff program. An unexpected build in US crude inventories weighed on oil prices. US data showed a drop in private job growth. The USD/CAD forecast shows renewed Trump tariff fears, which have weighed on the Canadian dollar. On the other hand, the US dollar has regained its shine due to a rally in Treasury yields. At the same time, market participants eagerly await employment figures from Canada and the US. The Canadian dollar gave up its gains on Wednesday and Thursday as traders worried about looming tariffs on Canada’s exports. Reports showed that Trump was considering emergency measures to facilitate a new tariff program. This move came after previous reports that the new administration’s tariffs would only target critical sectors. However, Trump maintains his aggressive outlook. He proposed a 25% tariff on goods from Canada, which would hurt the local economy. Meanwhile, the loonie also fell due to a decline in oil prices. Notably, data on Wednesday revealed an unexpected build in US crude inventories, indicating weak demand last week. On the other hand, the tariff news boosted US Treasury yields, supporting the greenback. Additionally, traders digested reports showing a drop in private job growth and an unexpected decline in initial jobless claims. All focus has shifted to the upcoming monthly employment figures from Canada and the US. USD/CAD key events today Market participants do not expect any key releases from Canada or the US today. Therefore, the price might consolidate ahead of employment figures from both countries. USD/CAD technical forecast: Bulls return to retest the 1.4400 resistance On the technical side, the USD/CAD price has risen to retest the 30-SMA after making a new low near the. The previous bullish trend paused at the 1.4450 key resistance level and entered a period of consolidation. Meanwhile, the RSI made a bearish divergence, showing bulls were losing enthusiasm. As a result, bears strengthened enough to trigger a sharp swing below the 30-SMA, which paused at the 1.4300 support level. The price has rebounded to retest the 30-SMA resistance and the 1.4400 key psychological level. If bears are ready to take charge, USD/CAD will soon bounce lower to revisit the 1.4300 support level. A break below this level would signal the start of a bearish trend. Moreover, it would allow the price to reach the 1.4201. https://www.forexcrunch.com/blog/2025/01/09/usd-cad-forecast-tariff-fears-deteriorate-risk-sentiment/
2025-01-08 10:54
Australia’s consumer inflation jumped by 2.3% in November. Underlying inflation in Australia dropped from 3.5% to 3.2%. US job openings unexpectedly rose in November to 8.10 million. The AUD/USD forecast turned bearish on Wednesday after Australia’s inflation figures increased the likelihood of a February RBA rate cut. Meanwhile, the greenback was on the front foot after economic data in the previous session revealed continued resilience. Data from Australia early Wednesday showed that consumer inflation jumped by 2.3% in November. This number was above estimates of a 2.2% increase. However, market participants focused on the trimmed mean figure, which dropped from 3.5% to 3.2%, indicating softer underlying inflation. The Reserve Bank of Australia is waiting to see inflation in its target band of 2%-3%. Therefore, the drop was a welcome surprise. Traders raised the chances of a rate cut in February from 50% to 64%, leading to a sharp drop in the Australian dollar. On the other hand, the dollar remained firm after data in the previous session supported the outlook for a gradual Fed in 2025. Notably, job openings unexpectedly rose in November to 8.10 million, above estimates of 7.73 million. Demand in the US labor market has remained resilient despite high interest rates. As a result, policymakers have assumed a more cautious stance heading into 2025. Meanwhile, business activity in the services sector improved, with the PMI increasing to 54.1. Economists had expected a 53.5 reading. If data keep surprising, Fed rate cut bets will continue dropping. AUD/USD key events today US ADP non-farm employment change US unemployment claims FOMC Meeting Minutes AUD/USD technical forecast: Bears fight to resume downtrend On the technical side, the AUD/USD price has risen and fallen sharply in a whiplash move. It has broken below the 30-SMA support, and the RSI is trading slightly below 50. Therefore, bears have a slight upper hand. Before this move, the price was on a downtrend that had paused near the 0.6200 support level. Price action indicated weaker enthusiasm to make new lows. At the same time, the RSI made a bullish divergence, suggesting fading bearish momentum. Consequently, bulls took charge by breaking above the 30-SMA. However, they met a solid hurdle at the 0.6300 resistance level, allowing bears to resurface. The previous downtrend will continue if AUD/USD breaks below the 0.6200 support. Otherwise, the price might consolidate. https://www.forexcrunch.com/blog/2025/01/08/aud-usd-forecast-rba-rate-cut-odds-up-after-easing-cpi/
2025-01-08 09:34
US job openings unexpectedly rose to 8.10 million in November. The US ISM services PMI increased to 54.1, above forecasts of 53.5. Canada’s Prime Minister Justin Trudeau announced plans to resign. The USD/CAD price analysis shows further support for a gradual Fed easing cycle. The US released upbeat data on Tuesday, which boosted the dollar against the Canadian dollar. However, political developments in Canada have allowed the CAD to make a new peak. The greenback soared on Tuesday after two separate economic reports revealed continued resilience in the US economy. Notably, US job openings unexpectedly rose to 8.10 million in November, beating estimates of 7.73 million. The figures indicated higher-than-expected demand for labor in November and a resilient labor market. This will likely keep Fed policymakers cautious. Meanwhile, another report showed that business activity in the US services sector jumped more than expected. The ISM services PMI increased to 54.1, above forecasts of 53.5. A resilient economy shows that the US central bank will keep rates at restrictive levels. As a result, the dollar rose. Traders will now await the FOMC meeting minutes for more clues on future Fed moves. On the other hand, although the loonie gave up some of Monday’s gains, it remained strong. Bullish sentiment soared after Prime Minister Justin Trudeau announced plans to resign. Therefore, there is more clarity about the future, with markets anticipating an election before October. Moreover, they expect a win for the opposition Conservatives. USD/CAD key events today US ADP non-farm employment change US unemployment claims FOMC Meeting Minutes USD/CAD technical price analysis: Bears trigger range breakout On the technical side, the USD/CAD price has made a lower low after breaking below the 1.4351 range support level. However, it has rebounded to retest the 30-SMA resistance and the 1.4351 key level. Initially, the price was stuck in a range between the 1.4450 resistance and the 1.4351 support levels. However, bullish momentum was fading despite attempts to break out of the range resistance. The RSI made a bearish divergence, which later played out as bears broke out of the consolidation area. If bears are ready to start a trend, the price will respect the 30-SMA resistance and bounce lower to make new lows. In such a case, USD/CAD would target the 1.4200 key psychological level. https://www.forexcrunch.com/blog/2025/01/08/usd-cad-price-analysis-us-data-backs-a-slow-fed-easing-cycle/
2025-01-07 11:29
Japan’s Finance Minister, Katsunobu Kato, warned traders against selling the yen. The USD/JPY pair is quickly approaching the pivotal 160.00 level. This week, the US will release its crucial nonfarm payrolls report. The USD/JPY price analysis shows some relief for the yen amid renewed warnings against excessive declines. Japan’s top officials are becoming increasingly concerned about the weak yen. On the other hand, the dollar was vulnerable as the market digested recent reports that Trump might go easy on tariffs. On Tuesday, Japan’s Finance Minister Katsunobu Kato warned traders against selling the yen. He emphasized that the government would take appropriate action to respond to excessive currency declines. The USD/JPY pair is quickly approaching the 160.00 level, prompting Japan to intervene last year. Therefore, market participants might be cautious since an intervention could momentarily reverse the trend. However, fundamentals point to further weakness for Japan’s currency, especially if the BoJ fails to hike interest rates soon. Notably, the dollar has a bright future under Trump’s administration. At the same time, the Federal Reserve is planning to reduce interest rates in 2025 gradually. Therefore, the gap in interest rates between Japan and the US will remain wide. Meanwhile, market participants will pay close attention to US data for more clues on Fed rate cuts. This week, the US will release its crucial nonfarm payrolls report. An upbeat report will further boost the dollar, while a downbeat report will increase Fed rate cut bets, hurting the greenback. USD/JPY key events today US ISM services PMI US JOLTS job openings USD/JPY technical price analysis: Bullish momentum wanes On the technical side, the USD/JPY price has attempted to breach the 158.02 resistance level again. However, it has pulled back below and is about to retest the 30-SMA support. Bulls are struggling to resume the previous trend. However, the bullish momentum is fading. The last trend peaked when the price met the 158.02 support level. Since then, it has remained in consolidation, with support at 156.03 and resistance at 158.02. At the same time, while the price has made a higher high, the RSI has made a lower one, indicating a bearish divergence. Therefore, bears might be ready to take charge. If this happens, the price will break below the 30-SMA and the 156.03 range support level. https://www.forexcrunch.com/blog/2025/01/07/usd-jpy-price-analysis-yen-recovers-as-intervention-fears-rise/
