2024-05-14 09:52

Business activity in the Euro Area expanded at a faster rate than that in the US in April. The euro has lost nearly 2.5% of its value against the dollar this year. Investors are awaiting the US PPI report. The EUR/USD outlook is bullish, as the euro shows remarkable resilience ahead of US wholesale inflation data. Despite a small pullback, the pair has sustained its recent uptrend amid signs that the economic performance gap between the Eurozone and the US is closing. Notably, recent data has revealed some economic improvements that have eased pressure on the ECB to cut rates. Moreover, business activity in the Euro Area expanded faster than in the US in April. At the same time, employment and growth figures in the US missed forecasts. Therefore, as pressure eases off the ECB, there is more pressure on the Fed to cut interest rates. This has allowed the EUR/USD pair to rise despite looming ECB rate cuts. Still, the euro has lost nearly 2.5% of its value against the dollar this year. This decline was mostly due to the divergence in policy outlooks between the ECB and the Fed. Markets expect the European Central Bank to cut rates three times this year. Meanwhile, the Fed might only cut twice. Moreover, this outlook could change with more inflation data from the US. The number of expected Fed cuts could be reduced if inflation beats forecasts. Furthermore, investors will likely push back the timing of the first rate cut. Consequently, the euro would fall. On the other hand, easing inflation would solidify Fed rate cut bets, allowing the euro to continue recovering. EUR/USD key events today US Core PPI m/m US PPI m/m Fed Chair Powell Speaks EUR/USD technical outlook: Bulls challenge 1.0800 after retesting channel support On the technical side, the EUR/USD price has risen to retest the 1.0800 resistance level. This comes after a big bounce from the 1.0725 support level. Here, the price made a bullish engulfing candle, respecting a solid support level comprising its bullish channel line and the 1.0725 level. After retesting its channel support, the price will likely rise to its channel resistance. However, to do that, bulls must break above 1.0800. Notably, EUR/USD is above the 30-SMA, and the RSI is above 50. Therefore, the bullish bias is strong. If this continues, the price will soon breach 1.0800. https://www.forexcrunch.com/blog/2024/05/14/eur-usd-outlook-euro-steadies-ahead-of-us-ppi-data/

2024-05-14 09:50

The dollar strengthened as investors prepared for the US PPI and CPI reports. There is a 50% probability of a Fed cut in September. Economists expect US consumer inflation to drop to 0.3% in April from 0.4%. The USD/JPY price analysis points northward as the dollar strengthens ahead of US inflation data. Meanwhile, the yen fell to a two-week low, raising fears that Japanese authorities might try to support their currency. The dollar strengthened as investors prepared for the US PPI and CPI reports, which will tell more on what the Fed might do in the future. Recent poor data from the US has raised bets that there might be two Fed cuts this year. Notably, weaker demand in the economy could lead to lower inflation. Furthermore, most policymakers have confirmed that the next policy move will be a rate cut. Still, the chances of a cut in September have fallen to 50% ahead of the inflation report. This decline comes because markets fear another upbeat report. The trend in recent months has been hotter than expected inflation figures. This time, economists expect the US consumer inflation to drop to 0.3% in April from 0.4% the previous month. Before this, there will be the wholesale inflation report. Any indications that inflation remains persistent could send rate-cut expectations lower. Meanwhile, the yen continued its post-intervention slide, raising concerns in Japan. On Tuesday, Japan’s Finance Minister Shunichi Suzuki said that the government will work closely with the BoJ to ensure they align their policy objectives. USD/JPY key events today US Core PPI m/m US PPI m/m Fed Chair Powell Speaks USD/JPY technical price analysis: Bulls set their sights on 158.00 On the technical side, the USD/JPY price has retraced more than 50% of its previous move. At the same time, it has broken above the 156.00 resistance level. The price has stayed comfortably above the 30-SMA for some time. Although the uptrend is a bit shallow, it barely pauses or pulls back. This means it might continue higher. The next target for the USD/JPY pair is at the 158.00 resistance level. Bullish momentum is strong, with the RSI nearly overbought. Therefore, nothing is stopping the price from reaching 158.00. Only a sudden catalyst in the opposite direction could break below the SMA and reverse the sentiment. https://www.forexcrunch.com/blog/2024/05/14/usd-jpy-price-analysis-yen-slips-to-2-week-low-before-inflation/

2024-05-13 10:29

The Canadian dollar rallied on Friday after data revealed that Canada added 90,400 jobs. The likelihood of a BoC cut in June fell to 44% after Canada’s employment report. US data revealed higher expectations for inflation in the year ahead. The USD/CAD outlook leans bearish as the pair lingers near recent lows following an unexpected surge in Canada’s employment numbers on Friday. Meanwhile, all eyes are on this week’s US inflation data for clues on the Fed’s policy outlook. The Canadian dollar rallied on Friday after data revealed that Canada added 90,400 jobs. This was about five times what economists had expected. Meanwhile, the unemployment rate held steady at 6.1%. The report surprised investors, who were convinced that Canada’s economy was deteriorating due to high interest rates. Consequently, there was a sharp decline in rate-cut expectations. Before the report, investors were pricing in a 60% chance that the Bank of Canada would cut rates in June. However, this figure fell to 44% after the report. The rally in the Canadian dollar pushed the USD/CAD pair lower, but not for long. The US dollar strengthened on Friday as data revealed higher expectations for inflation in the year ahead. In May, consumers raised expectations for inflation from 3.2% to 3.5%. This can become a big challenge for the Fed as expectations for inflation can actually drive inflation higher. Still, rate cut bets have risen since the poor US jobs report with investors now expecting two rate cuts this year totalling 50 basis points. Market participants are now awaiting the US PPI and CPI reports. These will further shape expectations for the timing of the Fed’s next policy move. USD/CAD key events today The pair will likely consolidate ahead of US inflation figures as no major reports are coming from Canada or the US. USD/CAD technical outlook: Bears challenging 1.3650 support On the technical side, USD/CAD has fallen to retest the 1.3650 key support level after respecting a solid resistance trendline. The bias is bearish because the price trades below the 30-SMA with the RSI in bearish territory below 50. However, the bearish move has paused at 1.3650, which has repeatedly reversed the price. If the support holds firm again, the price will rise to retest its resistance trendline. However, if bears are strong enough to breach the support this time, the price will fall to retest the 1.3551 level. https://www.forexcrunch.com/blog/2024/05/13/usd-cad-outlook-bearish-pressure-amid-canadas-jobs-surge/

2024-05-13 08:15

Investors are eagerly expecting US inflation data. There is a 61.2% chance that the Fed will cut rates in September. Australia’s government expects inflation to reach the central bank’s target by the end of this year. The AUD/USD forecast reveals a flat trajectory, marked by the dollar’s consolidation ahead of significant US inflation figures. Investors are mostly on the sidelines, awaiting more clues on the Fed’s rate-cut outlook. As a result, trading is thin. Fed rate-cut expectations have risen recently after the US released several downbeat reports. Employment figures and service activity data pointed to a slowdown in the economy. As a result, investors are more confident that high interest rates are lowering economic demand. For this reason, there is a 61.2% chance that the Fed will cut rates in September. At the same time, markets are betting that the Fed will implement cuts totalling 50 basis points this year. However, inflation figures are more significant in shaping rate-cut expectations. Therefore, there is a lot of anticipation in the markets to see whether inflation will support or lower these expectations. As we draw nearer to the September meeting, policymakers seek more evidence that inflation is on a clear downtrend. If there is no such evidence in the remaining inflation reports, they might not be confident enough to start cutting rates this year. Elsewhere, Australia’s government expects inflation to reach the central bank’s target by the end of this year. This is a more optimistic view than the RBA’s. Economists in the central bank expect inflation to end the year at around 3.8%. AUD/USD key events today It will be a quiet session, as neither Australia nor the US will release high-impact economic data. AUD/USD technical forecast: Consolidation near 30-SMA On the technical side, the AUD/USD price is consolidating near the 30-SMA after the bulls recently took back control. Initially, the price fell and punctured the 30-SMA, threatening the bullish bias. However, the bulls were back in the lead when the price broke above the SMA. At the same time, the RSI is back above 50, in bullish territory. Although bulls are holding the reins, momentum has weakened and the price is making small-bodied candles. If bulls find their footing above the SMA, the price will likely rise to 0.6650. Otherwise, it will fall further to retest the bullish trendline. https://www.forexcrunch.com/blog/2024/05/13/aud-usd-forecast-dollar-consolidates-ahead-of-key-data/

2024-05-12 10:21

US Unemployment claims rose to a bigger-than-expected 231,000 in the previous week. Markets predict two Fed cuts in 2024, with the first probably in September. Next week, the US will release its wholesale and consumer inflation reports. The EUR/USD weekly forecast points to more bullish momentum as the easing US labor market supports Fed rate cut expectations. Ups and downs of EUR/USD The EUR/USD pair had a slightly bullish week characterized by dollar weakness. Investors were still digesting the poor nonfarm payrolls report when the US released more downbeat employment data. Unemployment claims rose to a bigger-than-expected 231,000 in the previous week, indicating more cracks in the resilient labor market. As a result, there was an increase in Fed rate cut expectations. Markets now predict two cuts in 2024, with the first probably in September. Next week’s key events for EUR/USD Next week, the US will release its wholesale and consumer inflation reports. At the same time, investors will pay attention to the retail sales report. Inflation data will significantly impact the market as it will give insight into the outlook for Fed rate cuts. There is a lot of anticipation for this particular report because recent data from the country has shown a slowdown in the economy. Therefore, market participants are waiting to see if this will translate to lower inflation. At the same time, retail sales data will show the state of demand and consumer spending. A decline in sales would indicate further economic deterioration, which would allow the Fed to start cutting rates in September. However, if any of these reports come in higher than expected, investors will push back the timing for Fed rate cuts. EUR/USD weekly technical forecast: Bulls challenge solid resistance trendline On the technical side, the EUR/USD price trades above the 22-SMA. At the same time, the RSI supports bullish momentum as it trades above 50. However, although the sentiment is bullish, the larger trend remains down because the price is still making lower highs and lows. Moreover, although the price has made deep pullbacks, it has respected its bearish trendline. At the moment, bulls are retesting the resistance trendline. If the resistance holds firm as before, the price will fall below the 22-SMA to retest the 1.0601 support level. On the other hand, the bullish bias will strengthen if the price breaches the trendline and the 1.0850 resistance level. https://www.forexcrunch.com/blog/2024/05/12/eur-usd-weekly-forecast-easing-us-jobs-market-boosts-eur/

2024-05-11 19:41

The RBA was not as hawkish as most had expected. Australia recently reported higher-than-expected figures for Q1 inflation and employment. The dollar was weak after unemployment claims jumped. The AUD/USD weekly forecast remains bullish. The dollar weakness could continue next week with a focus on the US inflation report. Ups and downs of AUD/USD The AUD/USD pair had a slightly bearish week as markets absorbed the outcome of the RBA policy meeting. On Tuesday, the Reserve Bank of Australia held rates as expected. However, the central bank was not as hawkish as most had expected. Australia recently reported higher-than-expected figures for Q1 inflation and employment. As a result, economists had expected that the RBA would signal a possible rate hike. When they did not, the Aussie fell. Meanwhile, the dollar was also weak after unemployment claims jumped, confirming easing labor market conditions. Next week’s key events for AUD/USD Major reports from the US next week will include inflation and retail sales. At the same time, investors will focus on Australia’s employment figures. The US PPI and CPI figures will guide the Federal Reserve on the next step to take regarding monetary policy. Higher-than-expected figures would mean further delays in rate cuts. On the other hand, lower-than-expected figures would increase the chance of a rate cut in September. Meanwhile, Australia’s employment figures will show the state of its labor market which has remained resilient. AUD/USD weekly technical forecast: Bulls pause below the 0.6650 solid barrier On the daily chart, the bias for the AUD/USD price is bullish because it sits above the 22-SMA, and the RSI is above 50. However, on a larger scale, the price has remained in a sideways move for some time now. It has mostly traded between the 0.6475 support and the 0.6650 resistance level. Bears once tried to break out of this range area but failed, making a false breakout. Now, the price is back to the resistance level. The level is strong because it lies between the 0.5 and 0.618 key Fib levels. Therefore, bulls face a solid barrier that could lead to another bounce lower. In the coming week, bulls will need a significant catalyst to break past this resistance zone. This would clear the path to the 0.6850 resistance level. However, if the resistance holds firm, the price will likely fall to retest the 0.6475 support. https://www.forexcrunch.com/blog/2024/05/11/aud-usd-weekly-forecast-greenback-weak-focus-on-us-cpi/