2024-11-20 09:00

Canada’s inflation prices increased by 2.0% in October. The greenback eased after a rally early on Tuesday due to safe-haven demand. Markets await more clues on the outlook for Fed rate cuts. The USD/CAD price analysis shows a bearish shift in sentiment after data revealed that inflation in Canada was higher than expected. Meanwhile, the dollar eased as safe-haven demand caused by Putin’s nuclear announcement faded. Data on Tuesday revealed that Canada’s inflation prices increased by 2.0% in October, above estimates of 1.9%. Moreover, it was well above the previous reading of 1.6%. Consequently, traders lowered bets for another super-sized rate cut in December. Initially, low inflation and poor growth in Canada pushed the Bank of Canada to cut rates by 50-bps in October. Furthermore, markets were pricing a 38% chance of another such move in December. However, after the inflation report, this likelihood fell to 23%. As a result, the Canadian dollar rallied against the dollar. On the other hand, the greenback eased after a rally early on Tuesday due to safe-haven demand. Traders rushed for safety after Putin announced a lower threshold for using nuclear power against Ukraine. This change came after Ukraine used US missiles to attack Russia. However, the US made no response, easing fears of a nuclear war and an escalation in the Russia-Ukraine war. Meanwhile, markets await more clues on the outlook for Fed rate cuts. Policymakers have maintained a slightly hawkish tone, leading to a decline in bets for a December rate cut. Moreover, looming policy changes under Trump’s administration have changed the outlook for future Fed moves. Upbeat economic data will further support a pause in December. On the other hand, if data comes in line with forecasts or is slightly below, the Fed will cut rates by 25-bps in December. USD/CAD key events today US unemployment claims USD/CAD technical price analysis: Bears plunge to 1.3951 support On the technical side, the USD/CAD price has broken below its bullish trendline, indicating a shift in sentiment. At the same time, the price trades far below the 30-SMA, showing a solid lead by bears. Meanwhile, the RSI trades near the oversold region, suggesting solid bearish momentum. However, bears are facing the 1.3951 support level. A break below this level will allow bears to revisit the 1.3850 level. However, before that, the price might retest the recently broken trendline. https://www.forexcrunch.com/blog/2024/11/20/usd-cad-price-analysis-canada-inflation-exceeds-projections/

2024-11-19 14:13

Putin warned the US of a lower threshold for a nuclear strike. Economists expect UK inflation to increase by 2.2% in October. The dollar remained steady after gaining over 1.6% last week. The GBP/USD price analysis indicates a sudden rush to safe-haven assets that weakened the pound against the dollar. Meanwhile, the Trump trade kept the dollar near recent peaks as markets awaited economic data for clues on Fed rate cuts. There was some panic in the markets on Tuesday after Russian President Vladimir Putin warned the US of a lower threshold for a nuclear strike. This news came in response to Ukraine’s recent attack on Russia with US missiles. If Russia starts using nuclear power, it could escalate the war in Ukraine and impact the global economy. After Putin’s warning, investors dumped risky assets like the pound and bought the yen and the dollar. Meanwhile, market participants awaited the UK inflation report due on Wednesday, which might give clues on future BoE policy moves. Economists expect inflation to increase by 2.2% after a 1.7% increase in the previous month. Meanwhile, service inflation might ease further to 4.3%. Lower service inflation might rekindle bets for a rate cut at the December meeting. On the other hand, if inflation is higher than expected, the pound will rally as rate-cut bets drop. Meanwhile, the dollar remained steady after gaining over 1.6% last week amid the Trump trade. The looming policy changes in the US have shifted the outlook for Fed rate cuts. At the same time, policymakers have assumed a more hawkish tone, boosting the greenback. There is an increasing likelihood that the Fed will pause in December. GBP/USD key events today There will be no key reports from the US or the UK. Therefore, traders will monitor developments in the Ukraine war. GBP/USD technical price analysis: Downtrend continues after SMA retest On the technical side, the GBP/USD price has bounced lower after retesting the 30-SMA resistance. After consolidation, bears took charge by breaching the 1.2850 key support level. Moreover, the price made a sharp swing below the SMA, indicating a steep downtrend. At the same time, the RSI entered the oversold region, suggesting solid bearish momentum. However, it has made a bullish divergence that could lead to a deeper pullback or a reversal. On the other hand, if bearish momentum surges, the price will break below 1.2600. https://www.forexcrunch.com/blog/2024/11/19/gbp-usd-price-analysis-dollar-gains-amid-risk-off-sentiment/

2024-11-19 09:24

USD/JPY outlook weakens as the likelihood of a BoJ rate hike in December increased to 54%. The Fed’s policy outlook has changed significantly since Trump won. A BoJ rate hike might give the yen temporary support. The USD/JPY outlook shows a stronger yen as Ueda’s hawkish remarks increase the likelihood of a December BoJ rate cut. Meanwhile, the dollar remained steady as markets priced a more gradual pace for Fed rate cuts. Bank of Japan governor Kazuo Ueda, in his speech on Monday, noted that Japan’s economy was on the right path. Therefore, the central bank would need to hike rates in the near future. His remarks increased the likelihood of a rate hike in December to 54%, boosting the yen. However, Ueda failed to give clear guidance on the possible timing for the next rate hike. The outlook for Japan’s currency had improved slightly when the Bank of Japan started increasing interest rates and the Fed began cutting. However, the Fed’s policy outlook has changed significantly since Trump won the election. The US central bank might not cut rates as much as previously expected since Trump’s policies might increase inflation. Consequently, the rate differential between Japan and the US will likely remain wide, weighing on the yen. At the same time, Fed policymakers sounded more hawkish, with Powell stating there was no rush to lower borrowing costs. On the other hand, top officials in Japan are getting worried about a weak yen. Therefore, they are piling pressure on the Bank of Japan to hike rates. A BoJ rate hike might give the yen temporary support. However, as long as demand and inflation go up with Trump’s administration, the dollar will remain strong, putting pressure on the yen. USD/JPY key events today Market participants do not expect any key reports from Japan or the US. Therefore, they might continue with the Trump trade. USD/JPY technical outlook: Bears break up-channel On the technical side, the USD/JPY price has broken out of its bullish channel, with bears leading the way. The decline started at the 156.51 resistance level. Price action changed to show strong bearish candles, which broke below the 30-SMA. Initially, the price paused at the channel support. However, bears made another attempt at the level and broke below. The price is now facing the 154.00 support level. A break below will allow USD/JPY to reach the 151.74 level. https://www.forexcrunch.com/blog/2024/11/19/usd-jpy-outlook-uedas-hawkish-remarks-boost-yen/

2024-11-18 14:13

EUR/USD forecast remains neutral with no clear bias. Easing Fed’s dovishness keeps the US dollar strong. Market awaits impetus to break out of current range. The EUR/USD forecast remains neutral for the day as the economic calendar is light and trading activity is thin. The pair attempted to gain some ground from Friday’s lows but failed to sustain the gains at 1.0570. The broader dollar strength overshadows the recovery in risk assets. Geopolitics has again taken center stage with renewed heat from the Russia-Ukraine crisis. Hence, the risk-off sentiment favors the US dollar and keeps pressure on the Euro. Moreover, the fear of a trade war between the European Union and the US has also deteriorated Euro’s outlook. After Trump’s victory, market analysts have revised their forecast for the US dollar in 2025, expecting a sharp growth in the currency. Fed’s dovish bets have also eased as the rate cut path could be slowed down. Fed Chair Jerome Powell said he cannot predict Trump’s policy guidance on the future rate cuts. He also said that the economic indicators have not sent signals to ramp up rates. The inflation is slowly moving towards a sustainable 2% target that could help us attain a neutral rate. Key Events to Watch There is no significant event on the calendar today. However, the market participants may be looking for some fresh clues in today’s speech of ECB Chir Lagarde regarding monetary policy. EUR/USD Technical Forecast: Rangebound behavior The EUR/USD forecast remains elusive as buyers attempt to stay above the 1.0500 mark but fail to sustain the gains beyond 1.0570. The 4-hour chart shows the price remains in a tight range starting from Nov 13th. The pair is perhaps looking for a fresh impetus to break out of the range on either side. The 30-SMA lies above the price, showing a sustained bearish momentum, while the RSI has moved up to 40.0 level which indicates the pair is out of oversold condition and the downside momentum may continue. Technically, the pair needs acceptance above 1.0600 to initiate a bullish momentum, while breaking the 1.0500 mark may bring strong selling towards the 1.0450 area. https://www.forexcrunch.com/blog/2024/11/18/eur-usd-forecast-mild-recovery-within-bearish-trend/

2024-11-18 12:55

GBP/USD outlook is weak amid stronger dollar and weak UK economy. UK CPI and BoE commentary are important events to watch this week. Technically, probability of an upside correction exists. The GBP/USD outlook remains vulnerable as the week starts with the US dollar well bid against the risk assets. Though the British pound attempted to slightly recover, the renewed heat from Russia-Ukraine crisis brought fresh selling around 1.2640 area. On Friday, the UK economy showed a surprising contraction in GDP by 0.1% in October, which weighed heavily on the pair. The data also showed that the economy could not flourish in the third quarter. The data fueled the dollar rally started around two weeks ago amid Trump’s victory. Market analysts have been reassessing the Fed’s rate cut policy for the next year. According to CME’s FedWatchTool, the probability of a 25-bps rate cut in December has dropped from 77% to 62%. Fed officials are also unclear on the future rate path, which could be slowed down, keeping in view the economic growth and jobs data. Moreover, Donald Trump’s advisor Stephen Moore’s recent comments pressured the pound. He said that the UK must choose between the European Union and the United States. The US government will not be interested in working with the UK if it keeps the EU ahead of the US. Key Events to Watch The economic calendar is empty today. Hence, the market moves will likely be dominated by the risk sentiment and technical levels. For the current week, the market participants eye UK CPI data and BoE commentary. GBP/USD Technical Outlook: Buyers holding 1.2600 level The 4-hour chart of the GBP/USD shows a week momentum with last few bars moving in a tight range. The price lies well below the the key moving averages, revealing an upper hand for the sellers. However, the RSI indicates an overbought condition with a bullish divergence that may result in sellers’ profit taking. This could trigger a corrective upside move towards 1.2700 area. Alternatively, breaking the 1.2600 area may gather further selling traction and tilt towards 1.2575 ahead of 1.2550 and finally 1.2510 area. The lower timeframes like 30-minutes or 15-minutes should be watched to keep an eye on early signs of trend reversals. https://www.forexcrunch.com/blog/2024/11/18/gbp-usd-outlook-weakens-amid-uk-gdp-and-risk-sentiment/

2024-11-16 17:52

Trump’s win has changed the outlook for the economy and inflation. Data on US inflation revealed that price pressures increased as expected. US sales jumped more than expected. The USD/CAD weekly forecast remains bright, with the US dollar scaling a one-year high on Trump’s policy proposals. Ups and downs of USD/CAD The loonie had a bullish week as the dollar soared to a one-year high against its peers on Trump optimism. Market participants continued absorbing the recent US election outcome, which boosted the US dollar. Trump’s win has changed the outlook for the economy and inflation. Experts believe the economy will grow rapidly, and inflation will spike. Therefore, the Fed might pause its rate cuts. Meanwhile, data on inflation revealed that price pressures increased as expected. However, rate-cut bets dropped sharply after Powell said there was no hurry to lower borrowing costs. Other data showed that sales jumped more than expected, indicating robust consumer spending. Next week’s key events for USD/CAD Next week, Canada will release key figures on inflation and retail sales that will shape the outlook for Bank of Canada rate cuts. Inflation in Canada has eased significantly and is now at 1.6%, within the central bank’s target. As a result, the Bank of Canada is more focused on preserving growth, which has deteriorated. Still, the low inflation is also piling pressure on policymakers to lower borrowing costs. Market participants are already pricing more aggressive BoC rate cuts. Therefore, cooler-than-expected figures will weigh on the Canadian dollar. Meanwhile, the retail sales report will show the health of the consumer and the economy at large, further shaping the outlook for rate cuts. USD/CAD weekly technical forecast: Bearish RSI divergence On the technical side, the USD/CAD price has made a new high after respecting the 22-SMA as support. The price trades far above the SMA, indicating a solid bullish bias. At the same time, the RSI trades in the overbought region, suggesting strong bullish momentum. The price recently broke above the 1.3951 resistance level and rose to make a new high near the 1.4101 key level. However, while the price made a higher high, the RSI made a lower one, indicating weaker bullish momentum. Therefore, next week, USD/CAD might pull back next week to retest the 1.3951 support or the 22-SMA line. Nevertheless, the bullish trend will continue if the price stays above the SMA. https://www.forexcrunch.com/blog/2024/11/16/usd-cad-weekly-forecast-trump-proposals-boost-dollar-bulls/