2024-10-01 12:32

Manufacturing activity in the Eurozone fell at its fastest pace this year in September. Eurozone inflation fell below 2% in September, weighing on the euro. Market participants are pricing an 85% chance that the ECB will cut rates in October. The EUR/USD outlook shows a freefalling euro after a set of downbeat business activity and inflation figures from the Eurozone. At the same time, the dollar was on the front foot after Powell’s speech diminished the prospects of another super-sized rate cut in November. Eurozone data on Tuesday revealed that manufacturing activity fell at its fastest pace this year in September, indicating a drop in demand. The Eurozone manufacturing PMI dropped to 45.0, well below the 50 mark that separates expansion from contraction. Weaker economic activity pressures the European Central Bank to lower borrowing costs. A separate report showed that inflation in the bloc fell below 2% in September, weighing on the euro. The CPI eased from 2.2% in August to 1.8%, coming in below forecasts of a 1.9% increase. Furthermore, services inflation cooled slightly from 4.1% to 4.0%. The easing inflation has given policymakers the confidence to lower borrowing costs in June and September. Moreover, market participants are pricing an 85% chance that the ECB will cut rates in October. On the other hand, the Fed implemented its first rate cut in September. The 50-bps cut raised bets for another such move in November. However, on Monday, Fed Chair Powell pushed back these expectations. He said moving forward, the central bank would likely implement quarter-point cuts. As a result, the chances of a 50-bps cut in November fell from 53.3% to 35.4%. EUR/USD key events today ISM Manufacturing PMI JOLTS Job Openings EUR/USD technical outlook: Bears take over after RSI divergence On the technical side, the EUR/USD price has broken out of its bullish channel, with bears in the lead. Moreover, the price is on the verge of making a new low below the 1.1100 support level. The price trades well below the SMA with the RSI in the oversold region. Initially, the RSI had made a bearish divergence when EUR/USD paused at the 1.1200 resistance. The divergence was a clear signal that bulls were exhausted, and it played out when the price broke below its channel support. Given the solid bearish bias, the price will likely soon reach the 1.1050 support level. https://www.forexcrunch.com/blog/2024/10/01/eur-usd-outlook-weak-growth-inflation-hurts-euro/

2024-10-01 10:46

Fed Chair Powell noted that the central bank will stick to 25-bps rate cuts. Traders slashed the likelihood of a 50-bps November rate cut from 53.3% to 35.4%. Economists expect a slight improvement in US job growth. The USD/JPY price analysis shows a rebound from recent lows after Powell’s hawkish remarks. Meanwhile, the yen was licking its wounds after Bank of Japan meeting minutes revealed caution about near-term rate hikes. On Monday, Fed Chair Powell struck a hawkish tone, noting that the central bank will stick to 25-bps rate cuts moving forward. At the last meeting, the Fed lowered borrowing costs by an unexpected 50-bps. After that, market participants moved to price an over 50% chance of another significant rate cut. However, after Powell’s speech, traders slashed the likelihood of a 50-bps November rate cut from 53.3% to 35.4%. Consequently, the dollar rallied, pushing the USD/JPY pair higher. This week, the US will release more high-impact reports shaping the outlook for rate cuts. The most significant is the US nonfarm payrolls report. Economists expect a slight improvement in job growth, with the unemployment rate at 4.2%. If the figures beat forecasts, rate-cut bets will drop further, boosting the dollar. On the other hand, if the labor market shows deterioration, markets will raise the likelihood of another massive rate cut. Meanwhile, the yen gave up its election gains as policymakers sounded cautious in the BoJ minutes. Most officials called for patience as market turmoil clouded the outlook. At the same time, the Fed’s recent rate cut raised fears regarding the US economy. USD/JPY key events today US ISM Manufacturing PMI US JOLTS Job Openings USD/JPY technical price analysis: Struggling around 30-SMA On the technical side, the USD/JPY price has broken above the 30-SMA after finding support at the 1.1100 level. Meanwhile, the RSI trades slightly above 50, favoring bullish momentum. The previous bullish trend paused at the 1.1200 resistance level, where bears made an engulfing candle that broke below the SMA. However, they failed to sustain the move lower, leading to a rebound. USD/JPY might consolidate if the price stays between the 1.1200 resistance and the 1.1100 support. However, if the bullish bias strengthens, the price might break above 1.1200 to make a new high. https://www.forexcrunch.com/blog/2024/10/01/usd-jpy-price-analysis-powells-remarks-trigger-rebound/

2024-09-30 11:39

Inflation in Germany eased more than expected. Estimates show that Eurozone price pressures might fall from 2.2% to 1.9%. The US core PCE price index increased by 0.1% which is below estimates. The EUR/USD outlook shows a sudden, brief rally after German inflation data triggered a decline in ECB rate cut bets. Meanwhile, the dollar remained vulnerable after last week’s soft inflation figures. Market participants are now awaiting the nonfarm payrolls report. Data on Monday revealed that inflation in Germany eased more than expected. Consequently, traders expect soft Eurozone inflation in September. However, the euro rallied since the figures were better than those from France and Spain. The European Central Bank paused after starting its monetary easing in June. However, inflation has continued falling, with economists expecting further declines in September. Estimates show that Eurozone price pressures might fall from 2.2% to 1.9%. Such an outcome would push the ECB to lower borrowing costs further. Analysts expect the central bank to cut rates in October and December. On the other hand, the Fed is quickly catching up to other central banks after starting with a 50-bps rate cut. Moreover, inflation in the US has consistently dropped, giving policymakers confidence to lower borrowing costs. On Friday, the core PCE price index increased by 0.1%, below estimates of 0.2%. The report raised the likelihood of a 50-bps rate cut at the November meeting, weighing on the dollar. The next major report is the nonfarm payrolls, which will further shape the outlook for rate cuts. Economists predict a slight increase in job growth in September. Meanwhile, the unemployment rate could hold steady at 4.2%. EUR/USD key events today Fed Chair Powell Speaks EUR/USD technical outlook: Price action points to corrective move On the technical side, the EUR/USD price has paused again at the 1.1200 resistance level. At the same time, the price trades above the 30-SMA with the RSI above 50, supporting a bullish bias. Additionally, EUR/USD trades in a bullish channel, making higher highs and lows. However, price action shows that both bears and bulls are strong. Therefore, the uptrend might be a corrective move. In that case, the price might soon make a sharp, impulsive move up or down. A break above 1.1200 would allow the price to continue trending upward. On the other hand, the RSI has made a bearish divergence. If it plays out, the price might collapse to break out of its channel. https://www.forexcrunch.com/blog/2024/09/30/eur-usd-outlook-german-inflation-data-spurs-brief-rally/

2024-09-30 09:23

Canada’s GDP expanded by 0.2% in July, compared to estimates of 0.1%. The US core PCE price index came in lower than expected. Traders are pricing a 50% chance of a massive BoC cut in October. The USD/CAD forecast shows continued weakness in the Canadian dollar due to the prospect of a significant Bank of Canada rate cut in October. Meanwhile, the dollar was also fragile after PCE data revealed an unexpected decline in price pressures. The Canadian dollar fluctuated on Friday after domestic data showed better-than-expected economic growth. Canada’s GDP expanded by 0.2% in July, compared to estimates of 0.1%. However, the currency soon reversed as market participants digested the estimates. According to the report, the economy might stall in August. Consequently, traders are pricing a 50% chance of a massive BoC cut in October. Meanwhile, the US dollar lost ground on Friday after the core PCE price index came lower than expected. Notably, US inflation increased by 0.1%, missing forecasts of a 0.2% increase. At the same time, the annual figure eased to 2.2%, coming closer to the Fed’s 2% target. Inflation is coming down consistently and will likely soon reach the Fed’s target. As a result, policymakers are confident they have won the fight. Therefore, the Fed will not hesitate to cut interest rates. Moreover, market participants are pricing another 50-bps cut in November. Such significant cuts will put the Fed at the same level as other central banks that started easing earlier, such as the Bank of Canada. Furthermore, it will give these central banks the confidence to increase their size of rate cuts. More rate cuts in the US will weigh on the dollar. However, since the BoC is also reducing borrowing costs, the pair might consolidate. USD/CAD key events today Fed Chair Powell Speaks USD/CAD technical forecast: Bulls charge past 1.3500 level On the technical side, the USD/CAD price has recovered beyond the 30-SMA. The break above the SMA indicates a shift in sentiment. At the same time, the RSI has broken above the 50-mark and now trades in bullish territory. Bulls made a solid candle that broke above the 1.3500 resistance and the 0.382 Fib level. If this trend continues, USD/CAD will soon reach the 0.618 Fib retracement level. Still, the price must start making higher highs and lows to confirm a new bullish trend. https://www.forexcrunch.com/blog/2024/09/30/usd-cad-forecast-loonie-pressured-amid-bets-for-oct-rate-cut/

2024-09-28 19:46

A set of PMI figures revealed a significant drop in business activity in the Eurozone. US unemployment claims dropped, indicating tight labor market conditions. US inflation increased by 0.1% compared to estimates of a 0.2% increase. The EUR/USD weekly forecast shows a neutral bias as the Eurozone economy weakens and Fed rate cut bets soar. Ups and downs of EUR/USD The EUR/USD fluctuated this week and ended nearly flat amid a mix of US and Eurozone data. When the week began, a set of PMI figures revealed a significant drop in business activity in the Eurozone. This raised pressure on the ECB to continue cutting interest rates, weighing on the euro. Meanwhile, US business activity held steady as the economy remained resilient despite high interest rates. Moreover, unemployment claims dropped, indicating tight labor market conditions. However, the dollar weakened on Friday after the core PCE report revealed cooler-than-expected inflation. Price pressures increased by 0.1% compared to estimates of a 0.2% increase, raising the likelihood of another massive rate cut in November. Next week’s key events for EUR/USD Next week, market participants will pay attention to key US reports, including manufacturing business activity and the nonfarm payrolls report. Moreover, Federal Reserve Chair Jerome Powell will speak on Monday. The focus for the week will be the monthly employment report. Notably, the Fed is paying close attention to the labor market for any weakness. At the last meeting, the central bank cut rates by 50-bps, saying it was meant to keep the unemployment rate low. Therefore, traders will watch job growth and unemployment in September for clues on the Fed’s next policy move. Economists expect the economy to add 144,000 jobs in September. EUR/USD weekly technical forecast: Bulls show weakness at the 1.1175 resistance On the technical side, the EUR/USD price has revisited the 1.1175 resistance level, where it has paused. At the same time, the RSI has made a bearish divergence, indicating fading bullish momentum. The price has remained in a bullish trend, making higher highs and lows. However, the RSI showed weakness in the most recent move. Therefore, there is a chance the price might reverse to challenge the 22-SMA and the bullish trendline. A break below these levels would clear the path to the 1.1000 support level. Here, bears will fight to break the previous low and start making lower highs and lows. Such a move would confirm the start of a bearish trend. https://www.forexcrunch.com/blog/2024/09/28/eur-usd-weekly-forecast-downbeat-eu-data-caps-gains/

2024-09-28 19:39

The yen rallied after Shigeru Ishiba won Japan’s election. Ishiba supports the recent Bank of Japan policy moves. The dollar fell due to softer-than-expected inflation numbers. The USD/JPY weekly forecast leans South due to an increased likelihood of more rate hikes in Japan and cuts in the US. Ups and downs of USD/JPY The USD/JPY pair had a bearish week as the yen rallied after Japan’s election. Meanwhile, the dollar fluctuated due to mixed economic data. The tight election for the Prime Minister seat in Japan ended with a win for former defense minister Shigeru Ishiba. The yen rallied after the result because Ishiba supports the recent Bank of Japan policy moves. Therefore, analysts believe there will be more rate hikes under his leadership. Meanwhile, the dollar initially had a solid start to the week when data showed steady business activity and a decline in jobless claims. However, it ended weak due to softer-than-expected inflation numbers. Next week’s key events for USD/JPY Next week, all eyes will be on US economic data, with none expected from Japan. The US will release figures on manufacturing business activity and employment. Additionally, a speech from Fed Chair Powell might contain clues about future rate cuts. After the recent FOMC policy meeting, policymakers have taken a more dovish tone, implying more rate cuts in the future. Therefore, there is a chance Powell will continue with this trend, putting downward pressure on the US dollar. Furthermore, the monthly jobs report will show the state of job growth and unemployment. Economists expect 144,000 more jobs in the economy, a slight increase from the previous reading. Meanwhile, the unemployment rate might hold steady at 4.2%. USD/JPY weekly technical forecast: Bears pierce the 22-SMA On the technical side, the USD/JPY price is on a bearish trend as the price trades below the 22-SMA, with the RSI in bearish territory. However, price action shows weakness in the downtrend. The price trades near the SMA and has punctured the line several times. This is a sign that bulls are getting stronger. Meanwhile, bears are weakening, as seen in the RSI, which has made a bullish divergence. Therefore, if the price fails to break below the 141.01 support in the coming week, it might break above the SMA. Such a break would indicate a shift in sentiment, allowing the price to climb to the 149.57 resistance level. https://www.forexcrunch.com/blog/2024/09/28/usd-jpy-weekly-forecast-yen-soars-as-boj-rate-hike-looms/