2024-03-08 08:59
The USD/JPY bias remains bearish if it stays below the median line (ml). A new lower low activates more declines. The US data could change the sentiment today. The USD/JPY price registered a massive drop on Thursday as the US dollar tumbled. Meanwhile, the Japanese Yen got a boost from BoJ’s hawkish comments. The pair is trading at 147.88 at the time of writing, above today’s low of 147.52. The downside pressure remains high, so a deeper drop is still in the cards. The greenback is strongly bearish after Fed Chair Powell Testifies. Yesterday, the ECB left the monetary policy unchanged as expected but failed to change the sentiment. Today, the Japanese economic data came in mixed. The Economy Watchers Sentiment was reported at 51.3 points, above the 50.6 points expected. Leading Indicators came in at 109.9%, above the 109.7% expected, and the Current Account jumped from 1.81T to 2.73T, above the 2.07T estimated. Bank Lending rose by 3.0% less compared to the 3.2% growth forecasted, while Household Spending reported a 6.3% drop. The US data should be decisive and could change the sentiment today. The Non-Farm Employment Change is expected at 198K. The Average Hourly Earnings may report a 0.2% growth, while the Unemployment Rate could remain at 3.7%. Technically, the bias remains bearish as long as it stays below the descending pitchfork’s median line (ml). The sell-off was paused at 147.61 downside obstacle (historical level). It has registered only false breakdowns, signaling exhausted sellers. Staying above this static support and returning above the median line (ml) may announce a new bullish momentum. A new lower low, taking out the 147.61 level, activates more declines. The 147.00 psychological level represents a potential target if the rate continues to drop. https://www.forexcrunch.com/blog/2024/03/08/usd-jpy-price-pauses-downside-147-61-ahead-of-us-nfp/
2024-03-07 14:50
The bias is bullish despite minor retreats. The R3 is seen as a potential target. The ECB could change the sentiment today. The gold price extended its growth and is trading at $2,157 at the time of writing, below 2161 today’s high (all-time high). The US dollar’s weakness helped the yellow metal hit new highs. The bias is bullish, so more gains are in the cards. Yesterday, the ADP Non-Farm Employment Change came in at 140K, below 149K expected but above 111K in the previous reporting period. At the same time, JOLTS Job Openings was reported at 8.86M versus 8.80M expected. The greenback lost significant ground versus its rivals as the Federal Reserve is expected to start cutting the Federal Funds Rate soon. In addition, the BOC left the Overnight Rate unchanged at 5.00%. Today, the fundamentals should be decisive as well. The European Central Bank kept its monetary policy unchanged. The Main Refinancing Rate remained at 4.50%. The ECB press conference revealed a slightly optimistic outlook, but it primarily depended on the data to decide monetary policy. Furthermore, the Fed Chair Powell Testifies before the Senate Banking Committee should also have a major impact. The US NFP, Average Hourly Earnings, and Unemployment Rate data may bring high action tomorrow. As you can see on the hourly chart, the gold took out the $2,148 historical high and the first warning line (wl1) of the ascending pitchfork, confirming further growth ahead. Staying near these upside obstacles signaled an imminent breakout and continuation. The weekly R23 of $2,169 represents the next major upside target if the rate resumes growth. Still, after such impressive growth, we cannot exclude a probability of a corrective downside as the price needs to attract new buyers and more bullish energy before printing new all-time highs. So, the outlook remains bullish despite minor retreats. https://www.forexcrunch.com/blog/2024/03/07/gold-price-prints-all-time-high-focus-on-us-nfp/
2024-03-07 10:03
Markets are more optimistic that the BoJ will end negative rates in March. Most economists expect the Bank of Japan to end negative interest rates in April. US job openings in January declined, indicating weakness in the labor market. The USD/JPY outlook points south due to mounting expectations that the Bank of Japan will hike interest rates in March. Markets are optimistic that conditions are lining up for the Bank of Japan to end negative rates at this month’s meeting. Notably, there is a big chance the upcoming annual wage negotiations will lead to pay increases. As a result, policymakers are more willing to consider rate hikes. Meanwhile, most economists expect the central bank to end negative interest rates in April. Such a move would finally support the yen, which has weakened due to interest rate differentials. The BoJ remained dovish when most major central banks were hiking rates to tame inflation. As a result, Japan’s currency weakened significantly, constantly needing intervention for support. However, the narrative is slowly shifting. While other central banks, like the Fed, are considering cuts, the BoJ is on the verge of starting its hiking cycle. Meanwhile, the dollar weakened on growing confidence that the Fed would cut interest rates. Fed Chair Jerome Powell was slightly dovish when he said that rate cuts would be appropriate later in the year. Elsewhere, data from the US revealed a decline in job openings in January, indicating weakness in the labor market. A weaker labor market reduces the chance that inflation will flare up, allowing the Fed to consider rate cuts. USD/JPY key events today US initial jobless claims Powell’s testimony to Congress USD/JPY technical outlook: Price plummets following breakout from consolidation On the technical side, USD/JPY has fallen sharply after breaking out of consolidation. As a result, the price has hit its targets at the 0.382 and 0.618 Fib retracement levels. The price now sits well below the 30-SMA, with the RSI deep in the oversold region. Therefore, the bearish bias is strong. However, the price might need to pause after such a steep decline before continuing lower. A pullback could retest the 30-SMA as resistance before bouncing lower. Still, the price will likely soon break below the 0.618 Fib. In such a case, it might decline further to retest the 146.01 support level. https://www.forexcrunch.com/blog/2024/03/07/usd-jpy-outlook-yen-soars-on-boj-rate-hike-speculation/
2024-03-07 08:40
Governor Tiff Macklem dimmed expectations that the central bank would soon start cutting rates. The likelihood of a BoC rate cut in April fell to 23% from 43%. Oil prices have been on the rise recently due to supply worries. The USD/CAD forecast took a bearish turn after the Bank of Canada dashed hopes for an imminent rate cut. Moreover, the Canadian dollar strengthened, fueled by the surge in oil prices amidst concerns over supply shortages, adding to the currency’s decline. On Wednesday, the Bank of Canada held rates at 5%, in line with market expectations. However, Governor Tiff Macklem dimmed expectations that the central bank would soon start cutting rates, stating that inflation was still above the central bank’s 2% target. Therefore, policymakers want to see more progress. Consequently, investors scaled back expectations for rate cuts in Canada, boosting the Canadian dollar. Notably, the likelihood of a cut in April fell to 23% from 43% before the meeting. Moreover, traders are now fully pricing in the first rate cut in July from June. The pair also fell due to an increase in oil prices. Oil prices have been on the rise recently due to supply worries. Houthi militants continued attacking vessels in the Red Sea, further disrupting supply. Meanwhile, OPEC+ extended output cuts into the second quarter to support oil prices. Elsewhere, the dollar weakened after Powell confirmed that the Fed would cut rates in 2024. Market participants viewed his testimony as slightly dovish, boosting hopes for rate cuts. The Fed Chair will continue his testimony today and might give more clues on the outlook for rate cuts in the US. USD/CAD key events today US unemployment claims Fed Chair Powell’s testimony USD/CAD technical forecast: Price tumbles as 1.3600 resistance holds firm On the technical side, USD/CAD has fallen sharply after failing to breach the 1.3600 resistance barrier. The sharp decline has paused at the 1.3500 key support level. Notably, sentiment has shifted to bearish as the price has broken below the 30-SMA. However, the price still trades in a bullish channel on a larger scale. Therefore, it is still making higher highs and lows. Although bearish momentum is strong, with the RSI nearly oversold, the price trades near channel support. Therefore, bulls might be waiting to retake control and revisit the channel resistance. https://www.forexcrunch.com/blog/2024/03/07/usd-cad-forecast-boc-deals-a-blow-to-rate-cut-expectations/
2024-03-06 11:47
Staying near the upper median line signaled an imminent breakout. The R2 represents a potential target. The BOC and the US data should have a major impact today. The EUR/USD price is trading in the green at 1.0877 at the time of writing. The pair seems determined to extend its growth amid broader dollar weakness. Fundamentally, the US ISM Services PMI dropped from 53.4 points to 52.6 points, below the 53.0 points expected. Meanwhile, Factory Orders reported a 3.6% drop, more versus the 3.1% drop estimated. On the other hand, the German Final Services PMI and the Eurozone Final Services PMI came in better than expected, while the Eurozone PPI registered a 0.9% drop again. Today, the German Trade Balance came in better than expected, at 27.5B above 21.0B expected, while the Retail Sales rose by 0.1% as expected. Later, the US economic figures and the BOC should bring sharp movements. The ADP Non-Farm Employment Change could jump from 107K to 149K, while JOLTS Job Openings may drop from 9.03M to 8.80M. Also, the Fed Chair Powell Testifies represents a high-impact event, so anything could happen. Furthermore, the BOC is expected to keep the Overnight Rate at 5.00%, but the BOC Press Conference should have a major impact. From a technical point of view, the EUR/USD price stayed near the upper median line (uml) indicating an imminent breakout and continuation. As you can see on the hourly chart, the price jumped and stabilized above this broken dynamic resistance, signaling further growth. The breakout was confirmed, and now it has passed above the former high of 1.0865 and through the weekly R1 of 1.0870. These represented upside obstacles, so more gains are in the cards. The 1.09 psychological level and the weekly R2 of 1.0903 are seen as the next targets. https://www.forexcrunch.com/blog/2024/03/06/eur-usd-price-continues-upside-ahead-of-us-adp-ecb/
2024-03-06 10:02
Market participants eagerly await Powell’s speech before Congress. The US released data revealing weaker growth in the services sector. Data on Wednesday showed Australia experienced slower economic growth in Q4. Today’s AUD/USD forecast leans bullish as the dollar weakens ahead of Powell’s testimony to Congress. This weakness extended from the previous session when the US released downbeat economic data. Market participants eagerly await Powell’s speech before Congress, which might contain clues on the outlook for Fed policy. Powell will likely reiterate the view that the Fed is in no hurry to cut interest rates. However, any dovish inclination could further weaken the dollar, allowing the AUD/USD to rise. Dollar weakness started on Tuesday when the US released data revealing weaker growth in the US services sector. Consequently, markets gained confidence that higher interest rates were slowing the economy. Therefore, the Fed might be more inclined to start cutting interest rates in June. Similarly, rate-cut bets increased in Australia after data on Wednesday showed slower economic growth in Q4. Higher interest rates in Australia are starting to weaken economic growth. At the same time, inflation in the country is slowing, prompting the RBA to start thinking about the first rate cut. GDP rose 0.2% in Q4 missing forecasts of 0.3% growth. The report indicated a rising cost of living for Australian consumers. Notably, the RBA remains relatively hawkish despite the drop in headline inflation. According to the central bank, services inflation remains persistent, needing higher interest rates. As a result, markets expect the first RBA rate cut to come in August. AUD/USD key events today US ADP Non-Farm Employment Change Fed Chair Powell Testifies JOLTS Job Openings AUD/USD technical forecast: Bulls take the lead after bullish divergence. On the technical side, there has been a shift in sentiment to bullish as the price has broken above the 30-SMA. At the same time, the RSI has broken above the 50 mark and now trades in bullish territory. The shift in sentiment comes after the price failed to make a new low and the RSI made a bullish divergence. In the previous downtrend, although the price broke below the previous low, it failed to close below. Therefore, it made a big wick showing bulls were challenging further declines. Soon after, bulls gained momentum and broke above the 30-SMA resistance. However, to confirm this new direction, the price must make a higher high above the 0.6530 key resistance level. https://www.forexcrunch.com/blog/2024/03/06/aud-usd-forecast-dollar-retreats-ahead-of-powell-testimony/
