2024-09-18 10:32

UK service inflation rose by 5.6, above expectations for a 5.5% increase. The Bank of England will likely keep rates unchanged this week. US sales increased by 0.1% when estimates had shown a 0.2% decline in August. The GBP/USD forecast points to bullish optimism after UK services inflation data came in higher than expected. Meanwhile, the dollar was steady after rebounding in the previous session due to better-than-expected retail sales data. UK inflation held steady at 2.2% in August, meeting forecasts. However, market participants focused on service inflation, which rose by 5.6%, above expectations for a 5.5% increase. The Bank of England has remained cautious despite inflation reaching its target. Policymakers have been monitoring stubborn service price pressures. The report increased the likelihood that the Bank of England will keep rates unchanged this week. A separate report revealed that UK house prices increased by a slower 2.2% in July. Nevertheless, it was the fifth month in a row that prices increased. A pause by the BoE and a significant rate cut in the US could keep sterling on an upward trajectory. Notably, the dollar recovered on Tuesday after US retail sales jumped. Sales increased by 0.1% when estimates had shown a 0.2% decline in August. The increase showed that consumer spending remained strong, pointing to a resilient economy. Although it supported a smaller Fed rate cut, it was not enough to significantly change current expectations. Market participants are pricing a 63% chance of a 50-bps rate cut. Such an outcome could sink the dollar. Moreover, they will focus on messaging for future policy moves. GBP/USD key events today Federal Funds Rate FOMC Economic Projections FOMC Statement FOMC Press Conference GBP/USD technical forecast: Bulls make another attempt at 1.3200 On the technical side, the GBP/USD price is breaking above the 1.3200 resistance level. Previously, the price had briefly breached this level before pulling back. However, there was a surge in bullish momentum before the price reached the 30-SMA. However, to confirm a break above 1.3200, the price must detach from this level to make new highs. In such a case, bulls would likely revisit the 1.3301 level. The bullish trend will continue if the price stays above the 30-SMA with the RSI above 50. https://www.forexcrunch.com/blog/2024/09/18/gbp-usd-forecast-uk-services-inflation-beat-expectations/

2024-09-18 09:10

Canada’s inflation fell by 0.2% monthly, surprising economists who had forecast no change. Data revealed that US retail sales unexpectedly increased by 0.1%. The likelihood of a 50-bps Fed rate cut remains high at 63%. The USD/CAD price analysis shows mild bullish momentum as the Canadian dollar remains fragile after softer-than-expected inflation data. At the same time, the dollar was steady as sales data pointed to a gradual start to Fed rate cuts. Data on Tuesday showed that inflation fell by 0.2% monthly, surprising economists who had forecast no change. Inflation in Canada has consistently fallen, reaching the Bank of Canada’s target. As a result, experts believe the central bank might increase the size of future rate cuts. Consequently, the Canadian dollar might come under pressure, allowing USD/CAD to climb. However, the dollar’s upside potential is also low since the Fed is preparing to start lowering borrowing costs. The dollar increased on Tuesday after data revealed that US retail sales unexpectedly increased by 0.1%. Economists had expected sales to drop by 0.2%. The upbeat report briefly boosted the dollar, supporting the case for a small Fed rate cut on Wednesday. Nevertheless, the likelihood of a 50-bps cut remains higher at 63%. Market expectations shifted towards the end of last week when news outlets indicated a high probability of a massive Fed rate cut. Furthermore, market participants will focus on the messaging for future moves during the policy meeting. A dovish outlook could weigh on the dollar. On the other hand, a small rate cut and a cautious outlook for the future might boost the greenback. USD/CAD key events today Federal Funds Rate FOMC economic projections FOMC statement FOMC press conference USD/CAD technical price analysis: Bulls attempting a consolidation breakout On the technical side, the USD/CAD price has remained in its tight range, slightly below the 1.3600 critical level. Although bulls are in the lead, they are not committed to pushing the price far above the SMA. This is a sign of indecision or a pause due to exhaustion. The price sits slightly above the SMA with the RSI above 50. Therefore, the indicators support bulls. A surge in momentum might push USD/CAD above the 1.3600 resistance level. A break above this level would clear the path for the price to retest the 1.3701 resistance level. https://www.forexcrunch.com/blog/2024/09/18/usd-cad-price-analysis-cad-vulnerable-after-downbeat-cpi/

2024-09-17 10:37

The greenback was on the back foot as traders positioned themselves ahead of the FOMC policy meeting. Economists predict a 0.2% decline in US retail sales. Forecasts show that UK consumer inflation might hold at 2.2%. The GBP/USD price analysis indicates continued strength as the pound climbs to new highs while the dollar falls due to a surge in bets for a 50-bps Fed rate cut. At the same time, market participants eagerly anticipate UK inflation data and the Bank of England policy meeting. On Tuesday, the greenback was on the back foot as traders positioned themselves ahead of the FOMC policy meeting. Futures show a higher chance of a 50-bps rate cut than a 25-bps rate cut. This shift in expectations came on Friday after dovish reports from major US news outlets. At the same time, a retired Fed official said there was a strong case for a significant rate cut on Wednesday. However, this outlook might change again after the US retail sales report. Economists predict a 0.2% decline in sales. A bigger-than-expected drop in sales could bolster bets for a massive cut, further weighing on the dollar. On the other hand, if sales come in higher than expected, bets for a smaller cut will increase. In this case, the dollar would climb. Meanwhile, in the UK, market participants are waiting to see the state of inflation. According to forecasts, consumer inflation might hold at 2.2%. However, the core rate might increase. Currently, the market expects the Bank of England to keep rates unchanged. Nevertheless, rate cut expectations have risen, with the likelihood of a 25-bps cut climbing from 20% to 38%. GBP/USD key events today US core retail sales m/m US retail sales m/m GBP/USD technical price analysis: Bulls breach 1.3200 level On the technical side, the GBP/USD price has broken above the pivotal 1.3200 level. The bullish bias is strong since the price sits well above the SMA. At the same time, the RSI trades near the overbought region. Notably, the last time the price reached the 1.3200 resistance, bears quickly took over with a massive candle. Furthermore, the RSI did not enter the overbought region. However, this time, bullish momentum is stronger. Therefore, the price might soon reach the 1.3301 level. https://www.forexcrunch.com/blog/2024/09/17/gbp-usd-price-analysis-feds-50-bps-rate-cut-bets-surge/

2024-09-17 08:53

The Canadian dollar has remained subdued ahead of crucial inflation data. Price pressures in Canada might cool from 2.5% in July to 2.1% in August. The greenback is under pressure as market participants increasingly bet on a supersized rate cut. The USD/CAD outlook shows indecision as investors await key events in Canada and the US. Canada will release significant data on inflation, giving more guidance on the next Bank of Canada policy move. Meanwhile, market participants eagerly await the Fed’s policy meeting on Wednesday. Most major US peers have risen since Friday due to increased Fed rate cut expectations. However, the Canadian dollar has remained subdued ahead of crucial inflation data. The Bank of Canada has cut interest rates three times since June. Moreover, policymakers have indicated a willingness to increase the size of cuts depending on economic performance. Inflation in Canada has eased significantly and is nearing 2%. Economists predict today’s CPI report will show price pressures cooling from 2.5% in July to 2.1% in August. Such an outcome would give the BoC more room to continue lowering borrowing costs, weighing on the Canadian dollar. On the other hand, the greenback is under pressure as market participants increasingly bet on a supersized rate cut. Since Friday, the likelihood of a 50-bps rate cut has risen, reaching 59%. Nevertheless, there is still a high chance of a smaller cut. As a result, traders are awaiting the US retail sales report for more clues on the size of the first cut. USD/CAD key events today Canada CPI m/m Canada median CPI y/y Canada trimmed CPI y/y US core retail sales m/m US retail sales m/m USD/CAD technical outlook: Consolidation under 1.3600 On the technical side, the USD/CAD price trades in a tight range between the 30-SMA and the 1.3600 resistance level. Nevertheless, the bias remains bullish, with the price above the SMA and the RSI over 50. Bulls took charge when the previous downtrend paused at the 1.3450 support level. However, the bullish trend has paused below the 1.3600 key psychological level. There is a high chance the price will soon breach this resistance since bullish momentum remains strong. However, if bears take over, it will break below the SMA to target the 1.3450 support level. https://www.forexcrunch.com/blog/2024/09/17/usd-cad-outlook-indecision-ahead-of-canadas-cpi-fomc/

2024-09-16 10:23

ECB president Christine Lagarde said there was no predetermined rate-cut path. The likelihood of another 25-bps ECB rate cut fell from 30% to 20%. Former Fed policymaker Bill Dudley noted a solid case for a 50-bps rate cut. The EUR/USD outlook is inclined to the upside after ECB officials failed to give clear guidance on future rate cuts. The cautious tone led to a decline in ECB rate cut expectations, strengthening the euro. At the same time, the dollar remained vulnerable after news outlets on Friday renewed bets for a 50-bps Fed rate cut this week. On Thursday, the European Central Bank cut rates by 25-bps as expected. However, market participants had expected clear guidance on futures rate cuts. ECB president Christine Lagarde said there was no predetermined path for rate cuts. Therefore, the central bank will decide on a meeting-by-meeting basis. Furthermore, she noted that service inflation remains high. Market participants took this message as a lower chance of another rate cut in October. As a result, the likelihood of another 25-bps rate cut fell from 30% to 20%. A gradual pace for rate cuts in the Eurozone could diverge with an expected aggressive Fed rate-cutting cycle. Notably, expectations for a super-sized September Fed rate cut on Friday soared. Former Fed policymaker Bill Dudley noted a solid case for a 50-bps rate cut. The jump in rate-cut bets continued on Monday, putting pressure on the greenback. Nevertheless, the outlook remains uncertain since the likelihood of a 25-bps cut is also high. Therefore, the outcome on Thursday might catch some people off guard, causing turmoil in the markets. EUR/USD key events today Market participants are not looking forward to any high-impact events today. Therefore, the pair might have a slow day. EUR/USD technical outlook: Bulls eying 1.11151 On the technical side, the EUR/USD price has risen to challenge its previous high. The bullish bias is strong since the price sits well above the 30-SMA. At the same time, the RSI trades near the overbought region. The trend reversed after the RSI made a bullish divergence with the price. Bulls are now approaching the 1.1151 key resistance. A break above this level would solidify the bullish bias and confirm a new uptrend. Furthermore, it would clear the path for the price to revisit the 1.1200 critical resistance level. https://www.forexcrunch.com/blog/2024/09/16/eur-usd-outlook-ecb-unclear-on-rate-cuts-eyes-on-fomc/

2024-09-16 08:59

The dollar lost around 1.3% against the yen last week. News outlets revealed a high chance for a 50 bps Fed rate cut. The Bank of Japan will meet on Friday. The USD/JPY forecast indicates further declines for the dollar due to a surge in Fed rate cut expectations. At the same time, the yen was on the front foot as investors looked forward to the Bank of Japan policy meeting. The dollar lost around 1.3% against the yen last week after reports that the Fed might consider a more significant rate cut at this week’s meeting. Initially, markets were convinced that policymakers would vote for a 25 bps cut. Inflation was slightly higher than expected, and the labor market was not in such a terrible shape. Therefore, the US central bank could afford to start cutting rates slowly. However, this outlook shifted on Friday when news outlets revealed a high chance for a 50 bps rate cut. Consequently, investors moved to price a higher chance for such an outcome, weighing on the dollar. By Monday, investors were pricing a 59% of a 50 bps rate cut. At the same time, total cuts in 2024 rose to 125 bps. The Fed is poised to cut rates on Wednesday. However, traders are still betting between a 25 and a 50 bps rate cut. Therefore, whichever size the central bank picks will likely increase market volatility. On the other hand, the Bank of Japan is set to meet on Friday this week. Although the BoJ might keep rates unchanged, the messaging might be hawkish. Recent remarks from policymakers have shown that they are willing to keep hiking interest rates. USD/JPY key events today With a holiday in Japan and no key events in the US, the price might extend last week’s move. USD/JPY technical forecast: Bullish RSI divergence fails On the technical side, the USD/JPY price has made a new low in the downtrend after breaking below the 141.01 support level. This has strengthened the bearish bias as the price has fallen well below the 30-SMA with the RSI in the oversold region. Previously, the price had paused at the 141.01 level. Here, the RSI indicated a bullish divergence, signaling a reversal. However, when bulls took over, they failed to breach the 30-SMA, a sign that bears remain in the lead. This downtrend might soon reach the 139.02 support level. https://www.forexcrunch.com/blog/2024/09/16/usd-jpy-forecast-140-0-broken-amid-rising-fed-rate-bets/