2024-07-30 10:28
There is a 60% chance the BoE will cut rates on Thursday. UK service inflation has remained stubbornly high. Investors are hoping for a signal that the Fed will start cutting rates in September. The GBP/USD price analysis is leaning slightly bullish as the pound shows signs of recovery ahead of the Fed and Bank of England policy meetings. The Fed will probably hold current rates, while the BoE is more likely to cut them. The pound recovered on Tuesday after plunging in the previous session due to an increase in BoE rate cut bets. By Friday, markets were pricing at a 50% chance that the BoE would cut in August. However, this figure rose to 60% on Monday, weighing on the pound. Traders depend on speculation and the outlook for Fed policy. Due to the July 4th election, policymakers in the UK have remained silent for nearly two months. As a result, there has been little guidance on where rates might be in August. Inflation in the country has reached the 2% target. However, service inflation has remained stubbornly high, keeping policymakers cautious. Still, with inflation in the US easing, there is hope for a dovish Fed tilt that will allow other major central banks to follow suit. Meanwhile, the Fed policy meeting will significantly impact September rate cut expectations. In recent speeches, Powell has acknowledged progress on inflation. He said confidence is growing that inflation will fall to the 2% target. Additionally, Powell has noted the recent softer labor market figures, which could increase the urgency of lowering interest rates. Therefore, market participants are hoping for a signal that the Fed will start cutting rates in September. GBP/USD key events today US CB Consumer Confidence US JOLTS Job Openings GBP/USD technical price analysis: Weak bearish momentum signals a corrective move On the technical side, the GBP/USD price is trading in a tight, bearish channel with clear support and resistance lines. The decline started when the price failed to sustain a move above the 1.3001 resistance level. However, bears have been unable to make significant swings below the 30-SMA, indicating weak momentum. This weak momentum can also be seen in the RSI, which has failed to reach the oversold region. Therefore, this might be a corrective move. Bulls might take control with a break above the 30-SMA. Otherwise, the slow downtrend will continue below the 1.2800 support level. https://www.forexcrunch.com/blog/2024/07/30/gbp-usd-price-analysis-sterling-gains-ahead-of-boe-meeting/
2024-07-30 08:48
Last week, the yen gained over 2% against the US dollar. The BoJ might hike rates by 10bps. The Fed will likely keep rates unchanged. The USD/JPY outlook shows a mild bullish move as the pair recovers ahead of monetary policy meetings in Japan and the US. Investors are eyeing a potential rate hike from the Bank of Japan on Wednesday. Meanwhile, expectations suggest the Fed will maintain its current rates. Last week, the yen gained over 2% against the US dollar amid increased expectations for a BoJ rate hike. Investors have gained confidence in a hike because of increased pressure to support the weak yen. As a result, there is a 63% chance that Japan’s central bank will announce a 10bps rate hike tomorrow. However, experts have warned that there is a risk the central bank might disappoint. The BoJ has surprised markets many times before. If there is no rate hike tomorrow, it might be a dark day for the yen. Meanwhile, traders also anticipate the BoJ’s announcement of plans to reduce its bond purchases. Such an outcome would show confidence that Japan’s economy is on steadier ground, which could propel the yen higher. On the Fed’s side, investors will focus on economic projections and Powell’s message. At the last meeting, the Fed projected one rate cut in December, which led to a decline in September’s rate cut expectations. If policymakers maintain this outlook, rate-cut bets will fall again, boosting the dollar. However, market participants expect a more dovish outlook given the recent cooler inflation. Notably, policymakers could signal the first cut in September. USD/JPY key events today US CB consumer confidence US JOLTS Job Openings USD/JPY technical outlook: Morning Star pattern ignites buyers On the technical side, the USD/JPY price has broken above the 30-SMA, indicating a shift in control from bears to bulls. The RSI also shows a shift in sentiment, having broken above 50. This new move comes after the downtrend paused at the 152.01 support level. At this point, the price made a Morning Star candlestick pattern, signaling a looming bullish reversal. Since then, bulls have taken charge and broken above the 30-SMA. However, they face a solid barrier at the 154.80 key level. A break above would clear the path to the next resistance at 158.02. https://www.forexcrunch.com/blog/2024/07/30/usd-jpy-outlook-recovering-as-investors-eye-boj-fed/
2024-07-29 10:49
Major events this week include the Fed policy meeting and NFP. The likelihood of a Fed cut this week is below 5%. ECB’s Schnabel said Eurozone service price growth remains a significant problem. The EUR/USD outlook points south, with the dollar firming ahead of Wednesday’s Federal Reserve policy meeting. Meanwhile, ECB policymakers have created a mixed picture of the outlook for European Central Bank rate cuts. Markets are preparing for several major events this week, including the Fed policy meeting and US nonfarm payrolls. Meanwhile, the Eurozone will release key inflation data shaping the outlook for ECB rate cuts. On Friday, data revealed that US inflation increased slightly, aligning with expectations. As a result, markets are still expecting the first cut in September. Meanwhile, the likelihood of a cut this week is below 5%. At the Fed policy meeting, officials might highlight the progress in inflation towards the 2% target. However, there might be caution regarding the US economy’s resilience. The continued strength gives the Fed more room to wait for inflation to drop. Still, investors are confident policymakers will call for a rate cut in September. Meanwhile, inflation is at 2.5% in the Eurozone, nearing the ECB’s 2% target. However, the central bank held rates in July due to high service inflation. On Friday, ECB’s Isabel Schnabel noted that the central bank has a challenging task ahead to lower inflation. According to her, service price growth remains a significant problem. However, other policymakers are ready to cut in September. Meanwhile, ECB President Christine Lagarde said that September remains wide open, meaning anything could happen, depending on incoming data. EUR/USD key events today Neither the US nor the Eurozone will report high-impact economic data today. Therefore, the pair might consolidate. EUR/USD technical outlook: Solid support at 1.0825 On the technical side, the EUR/USD decline has paused at the 1.0825 support level. Recently, the price was in a corrective move that retested the 30-SMA resistance. Since the SMA held firm, the price bounced lower with an impulsive candle. However, bears must break below 1.0825 to make a lower low and confirm a downtrend. Notably, the RSI is showing weaker bearish momentum near 1.0825. If bears fail to break below, the trend might reverse, with the price breaking above the SMA. However, if bearish momentum increases, the downtrend will continue with the target of 1.0750. https://www.forexcrunch.com/blog/2024/07/29/eur-usd-outlook-dollar-soars-in-wake-of-fomc-meeting/
2024-07-29 08:54
The Bank of Canada implemented its second rate cut on Wednesday. Investors are pricing in a 70% chance that the BoC will cut rates in September. US inflation increased modestly, which is in line with forecasts. The USD/CAD forecast shows a solid uptrend as the Canadian dollar extends declines, driven by increased expectations for BoC rate cuts. Additionally, the loonie remains weak due to falling oil prices. The Canadian dollar had a bearish week after the Bank of Canada implemented its second rate cut on Wednesday. Moreover, the central bank indicated that there would be more cuts if inflation continued easing. Analysts believe Canada’s central bank is now focused on spurring growth. Notably, high rates have hurt demand in Canada’s economy. As a result, there is a lot of pressure to lower borrowing costs and support the economy. Consequently, investors are pricing a 70% chance that the BoC will cut rates in September. At the same time, oil prices fell last week, hurting Canada’s commodity currency. Due to China’s weak economy, demand concerns were the primary catalyst for this move. Furthermore, Israel and Hamas made steps towards a ceasefire that would reduce the risk of escalation in the war. Meanwhile, data on Friday showed US inflation increasing modestly, which aligns with forecasts. As a result, there was little impact on Fed rate cut expectations. Markets still expect the first rate cut in September. However, when policymakers meet this week, they might call for caution since the economy remains robust. Still, they might signal a more dovish outlook since inflation is progressing to the 2% target. USD/CAD key events today Investors do not expect high-impact economic reports from the US or Canada today. Therefore, the pair might extend last week’s rally. USD/CAD technical forecast: Double top and bearish divergence On the technical side, the USD/CAD price has slowed down near the 1.3850 key level. However, the bullish bias remains intact, with the price above the 30-SMA and the RSI above 50. The uptrend has continued for a long time without pullbacks to retest the SMA. Therefore, bulls must be exhausted. As a result, bears have started making strong candles below the 1.3850 level. At the same time, the price has made a double top with a bearish RSI divergence, indicating fading momentum that could lead to a bearish reversal. However, the bullish trend will continue if the price breaks above 1.3850. https://www.forexcrunch.com/blog/2024/07/29/usd-cad-forecast-bullish-momentum-continues-on-dovish-boc/
2024-07-28 07:48
Investors are fully expecting two rate cuts from the BoE by December. Data on US and UK business activity showed further expansion in June. Investors will pay close attention to monetary policy meetings in the US and the UK. The GBP/USD weekly forecast is trending south as markets shift towards a more dovish outlook for the Bank of England. Ups and downs of GBP/USD The GBP/USD price fell last week as Bank of England rate cut expectations increased. At the same time, the dollar firmed as data showed economic resilience and easing inflation. Investors are fully expecting two rate cuts from the BoE by December. However, the timing remains unclear. Rate cut bets went up as bets for a September Fed cut rose. Meanwhile, data on business activity from the US and the UK showed further expansion in June. Therefore, both economies are doing well despite high rates. Additional US data revealed bigger-than-expected economic growth in Q2 and a drop in unemployment claims. The week ended with inflation figures coming in as expected at 0.2%. Next week’s key events for GBP/USD Next week, investors will pay close attention to monetary policy meetings in the US and the UK. The Fed will meet on Wednesday and likely keep interest rates unchanged at 5.50%. Meanwhile, the Bank of England will meet on Thursday, and there is a 50% chance policymakers will vote to lower borrowing costs. Additionally, markets will focus on the all-important US monthly employment report. The last report showed slower job growth and an increase in the unemployment rate. If this trend continues, policymakers might assume a more dovish tone. At the same time, the dollar would fall, allowing GBP/USD to rally. GBP/USD weekly technical forecast: Bears challenge bullish trend at the 22-SMA On the technical side, the GBP/USD price has fallen back to the 22-SMA after reaching new highs. However, the bullish bias remains intact, with the price above the SMA and the RSI slightly above 50. The bullish trend continued when the price broke above the 1.2800 key resistance level. Bears prompted a pullback before the price reached the 1.3050 key level. If the bullish trend remains in play, the price will bounce off the 22-SMA to revisit the 1.3050 resistance. However, if bears take over, it might break below the SMA and the 1.2800 support. https://www.forexcrunch.com/blog/2024/07/28/gbp-usd-weekly-forecast-expecting-a-dovish-boe-path-ahead/
2024-07-27 08:48
Investors increased bets on a BoJ rate hike next week. US GDP figures for Q2 came at 2.8%, well above the 2.0% forecast. Investors await the Bank of Japan and Fed policy meetings. The USD/JPY weekly forecast is bearish, with investors increasingly betting on a Bank of Japan rate hike at next week’s meeting. Ups and downs of USD/JPY The USD/JPY pair had a bearish week, where the yen found its feet against the dollar. The rally in the yen came as investors increased bets on a BoJ rate hike at next week’s policy meeting. The rate hike optimism kept the dollar at bay despite better-than-expected economic data. Notably, US business activity increased in June as the services sector expanded. Meanwhile, GDP figures for Q2 came in at 2.8%, well above the 2.0% forecast. Additionally, unemployment claims in the US fell last week, indicating a still robust labor market. Finally, the core PCE index came in line with expectations, rising by 0.2% m/m. Next week’s key events for USD/JPY Next week, USD/JPY will experience a lot of volatility with the Bank of Japan and Fed policy meetings. At the same time, the US will release key manufacturing and employment data. Notably, there is a 67.2% chance that the BoJ will hike rates by 10bps next week. If this happens, the yen might strengthen, pushing USD/JPY lower. Meanwhile, the Fed will likely keep rates unchanged. However, given the recent decline in inflation, policymakers might take a more dovish stance. Elsewhere, the US nonfarm employment report will continue shaping the outlook for Fed rate cuts. Easing in the labor market will give policymakers more confidence to cut in September. USD/JPY weekly technical forecast: Signaling a strong downtrend On the technical side, the USD/JPY price has broken below its bullish trendline and is approaching the 152.01 support level. Moreover, the RSI has crossed below 50, indicating a bearish sentiment shift. The price was in an uptrend with higher highs and lows for a long time. However, this changed when the price broke below the previous low to make a lower low. There is a high chance it will also make a lower high next week. A downtrend would allow bears to retest the 152.01 and 146.50 support levels. https://www.forexcrunch.com/blog/2024/07/27/usd-jpy-weekly-forecast-bearish-amid-boj-rate-hike-odds/
