2024-02-09 08:45
The yen weakened as markets lowered expectations for aggressive BoJ rate hikes. The dollar held on to gains made on Thursday. The likelihood of a Fed rate cut in March has fallen to 16.5%. The USD/JPY outlook was bullish as the currency pair ascended to a 10-week high, propelled by a resilient dollar and a weakening yen. The yen weakened as markets lowered expectations for aggressive rate hikes by the Bank of Japan starting as early as March. On the other hand, the dollar held on to gains made on Thursday after an upbeat employment report. Yen’s weakness is back because the market overestimated the pace and size of rate hikes after a BoJ policy shift. BoJ policymakers have recently pushed back on these expectations, saying the shift might be slower than previously thought. On Thursday, BoJ deputy governor Uchida dismissed expectations that the central bank would aggressively raise interest rates. Moreover, on Friday, BoJ governor Ueda said that monetary conditions will likely remain easy even as the bank shifts to rate hikes. As the yen falls, $152 is becoming a target once again. Therefore, Japanese authorities may start warning of a possible intervention. Notably, Japan’s Finance Minister Suzuki said on Friday morning that he was closely watching currency moves. Meanwhile, the dollar was heading for a fourth week of gains as data from the US continued pointing to a strong economy. US initial jobless claims fell more than expected last week, indicating labor market strength. By Friday, the likelihood of a Fed rate cut in March had fallen to 16.5%, down from 65.9% a month ago. USD/JPY key events today There won’t be any high-impact economic reports from the US or Japan today. Therefore, it might lead to thin trading for the pair. USD/JPY technical outlook: Bullish momentum shatters 148.51 resistance level On the technical side, USD/JPY has broken above the 148.51 resistance level, indicating a bullish momentum surge. This has aligned conditions for a bullish trend. First, the price has made a higher low and high. Second, it has respected the 30-SMA as support. Finally, the RSI trades near the overbought level, showing solid bullish momentum. However, the price might soon pull back as it approaches a solid resistance zone. Just above the current price level lies the 1.27 fib extension and the 150.00 key levels. This resistance zone might temporarily pause the rally. https://www.forexcrunch.com/blog/2024/02/09/usd-jpy-outlook-pair-hits-10-week-high-on-yen-weakness/
2024-02-08 12:48
Taking out 1.0784 activates more gains. The lower median line (LML) represents a dynamic support. The US Unemployment Claims could bring high action. The EUR/USD price dropped like a rock on Thursday, trading at 1.0762 at the press time. It climbed as high as 1.0788 today, where it found resistance. Yesterday, the German Industrial Production reported a 1.6% drop versus the 0.4% drop expected, while the US Trade Balance came in at -62.2B versus -62.0B expected. Today, the US economic data could bring some action. The Unemployment Claims indicator could drop from 224K to 221K in the last week. This situation may help the Greenback appreciate versus its rivals. In addition, the Final Wholesale Inventory is expected to report a 0.4% growth for the second month in December. Also, the FOMC Member Barkin Speaks could have an impact in the short term. Tomorrow, the German Final CPI may report a 0.2% growth. Furthermore, the Canadian Employment Change and Unemployment Rate could move the USD. From the technical point of view, the EUR/USD price turned to the downside after failing to take out the 1.0784 static resistance. The false breakouts announced exhausted buyers. Now, it could approach the ascending pitchfork’s lower median line (LML), representing dynamic support. The price could still extend its rebound despite minor retreats as long as it stays above it. The S1 of 1.0745 stands as a static support. Testing the lower median line and registering only false breakdowns signals a new bullish momentum. A bullish closure above 1.0784 opens the door for more gains. A new higher high, removing the immediate downside obstacles, should announce more declines. https://www.forexcrunch.com/blog/2024/02/08/eur-usd-price-sellers-dominate-before-unemployment-claims/
2024-02-08 10:12
Several policymakers gave reasons why there was no hurry to lower interest rates. Oil prices rose due to signs that Middle East tensions will likely continue. Canada’s economy recorded a surprise deficit in January as exports fell and imports rose. Thursday’s USD/CAD outlook was slightly bullish as the US dollar strengthened after policymakers continued to push back on rate cut expectations. Fed policymakers have recently said they would prefer to hold off on rate cuts until there is confidence that inflation will reach the 2% target. On Wednesday, several policymakers gave reasons why there was no hurry to lower interest rates. Moreover, the US economy’s resilience has shown that there is still a need for high interest rates. Meanwhile, the Canadian dollar was also steady, holding near recent highs due to a rise in oil prices. Oil prices rose due to signs that Middle East tensions will likely continue. Notably, Israel turned down Hama’s appeal to end the war. The Canadian dollar will keep strengthening as long as oil prices keep rising. Elsewhere, data on Wednesday revealed that Canada’s economy recorded a surprise deficit in January as exports fell and imports rose. This was the first monthly deficit since July. Meanwhile, Bank of Canada policy meeting minutes published on Wednesday showed that policymakers were concerned that inflation remained persistent. Therefore, the bank will likely hold off on cutting interest rates. Moreover, the BoC is worried about shelter inflation. If Canada’s housing market recovers more than expected in 2024, it might keep overall inflation high. USD/CAD key events today US initial jobless claims. USD/CAD technical outlook: Decline takes a breather at 0.5 fib retracement On the charts, the USD/CAD price has fallen below the 30-SMA, showing a possible shift in sentiment to bearish. At the same time, the RSI is now trading in bearish territory below 50. However, the decline has paused at the 0.5 Fib retracement level, a key support and resistance level. Consequently, bulls have emerged at this level and might push the price back above the SMA. If this happens, the price will likely climb to retest the 1.3525 resistance level. A break above this level would make a higher high and start a bullish trend. On the other hand, if the price breaks below the fib level, it will likely continue falling to the 1.3375 support level. https://www.forexcrunch.com/blog/2024/02/08/usd-cad-outlook-us-dollar-rises-as-rate-cut-bets-fade/
2024-02-08 08:33
Fed policymakers said there was no urgency to start cutting interest rates. The likelihood of a March cut has dropped to 18.5%. Uchida was less hawkish when he said the BoJ would not hike rates aggressively. Thursday’s USD/JPY forecast brightened with a bullish tone as the dollar strengthened following mildly hawkish comments from Fed policymakers. At the same time, the yen found itself on shaky ground as the BoJ’s deputy governor dismissed the likelihood of rapid rate hikes. Fed policymakers continued to push back on rate cut expectations, saying there was no urgency to start cutting interest rates. Moreover, when the Fed does start easing monetary policy, there will be no need to do it quickly. Consequently, bets for rate cuts continued dropping. The most recent figures show that the likelihood of a March cut has dropped to 18.5%. Meanwhile, there is a 60% chance that the Fed will cut rates by 25bps in May. On the other hand, the outlook on monetary policy in Japan is different. While traders expect cuts in the US, they expect rate hikes in Japan. However, BoJ deputy governor Shinichi Uchida was less hawkish when he said they would not hike rates aggressively. Still, this is a big shift from the central bank’s dovish tone. There is more hope in the market that Japan will move from negative interest rates. Moreover, the central bank is set to start easing its massive stimulus. Furthermore, Uchida said the conditions for moving out of negative interest rates were aligning. Companies in Japan are hiking wages and pushing up service sector prices. As a result, markets expect the BoJ to start hiking interest rates in March or April. USD/JPY key events today US unemployment claims USD/JPY technical forecast: Bulls are poised to surpass the 148.51 barrier On the technical side, USD/JPY is on the brink of pushing beyond the 148.51 resistance level. Initially, this level led to a pause in the bullish move, allowing bears to take over. However, the retracement was short-lived as the price found solid support at the 146.00 key level. At this level, bulls returned stronger, pushing the price above the 30-SMA to retest the 148.51 resistance. The first attempt failed, leading to a retest of the 30-SMA support. However, the bullish bias remained strong as the price stayed above the SMA. At the same time, the RSI stayed above 50 in bullish territory. Therefore, there is a high chance that the price will break above the 148.51 resistance this time. https://www.forexcrunch.com/blog/2024/02/08/usd-jpy-forecast-dollar-gains-on-feds-hawkish-remarks/
2024-02-07 09:51
The dollar weakened after a two-day rally as investors took profits. The recent rally in the dollar started when the US released upbeat employment data. Traders are placing a 21.5% probability that the Fed will cut rates in March. The EUR/USD forecast was bullish as the dollar weakened after a two-day rally with investors taking profits. However, analysts believe the pullback in the dollar is only technical as the price retraces the recent surge. Notably, fundamentals still support a stronger dollar. The recent rally in the dollar started when the US released upbeat employment data. The figures came in much higher than expected, indicating a strong labor market. Consequently, the dollar surged as bets for Fed rate cuts plunged. Moreover, the jobs report brought to light the fact that the US economy still needs high rates to cool demand. Furthermore, Powell fueled the dollar rally with comments that dimmed hopes for a March rate cut. He said there was still no clear evidence that inflation will consistently drop to the 2% target. Therefore, the Fed will likely not rush to lower interest rates. Currently, traders are placing a 21.5% probability that the Fed will cut rates in March. This significantly declined from the 68.1% probability when the year began. Meanwhile, policymakers are also pushing back on rate cut expectations in the Eurozone. ECB’s Isabel Schnabel has called for patience regarding rate cuts. According to her, the ECB should go slow on reducing interest rates as there is a chance that inflation might flare up. Moreover, tensions in the Red Sea could lead to a spike in oil prices that might increase inflation. EUR/USD key events today The pair will probably drift as there won’t be any high impact releases from the Eurozone or the US. EUR/USD technical forecast: Price dips below 1.0800 support, ending consolidation On the charts, the EUR/USD price has finally broken below the 1.0800 support level, ending a period of consolidation. As a result, the price has made a lower low, indicating the continuation of the bearish trend. At the same time, the RSI made a new low near the oversold level, showing solid bearish momentum. However, the decline has paused, allowing the price to retrace the recent move. Given the bearish bias, it will likely respect the 30-SMA and the 1.0800 resistance levels and bounce lower for a new low. The next target for the downtrend is at the 1.0701 support. https://www.forexcrunch.com/blog/2024/02/07/eur-usd-forecast-dollar-retreats-following-two-day-rally/
2024-02-07 09:47
The downside pressure remains high as long as it stays below the upper median line. Taking out the pivot point activates more declines. The US and Japanese figures could have a significant impact tomorrow. The USD/JPY price dropped as low as 147.70 today, where it found demand again. Now, it has turned to the upside and is trading at 147.98 at the time of writing. The pair tumbled as the US dollar lost traction from a one-week top. After yesterday’s sell-off, the pair is rebounding. Yesterday, the Japanese Average Cash Earnings and Household Spending came in worse than expected, while the US RCM/TIPP Economic Optimism was reported lower at 44.0 points compared to 47.2 points forecasts. Today, the Japanese Leading Indicators came in at 110.0%, above the estimated 109.4%. On the other hand, the Trade Balance could jump from -63.2B to -62.0B. The greenback needs strong support from the US economy to be able to come back higher. Tomorrow, Japan will release the Current Account, Bank Lending, and the Economy Watchers Sentiment, while the US will publish the Unemployment Claims and the Final Wholesale Inventories. Only better-than-expected Japanese data could help the Yen extend its short-term growth. From the technical point of view, the USD/JPY price turned to the downside after failing to take out the former high of 148.82. It slumped after retesting the descending pitchfork’s upper median line (uml). Now, it has found support on the 50% Fibonacci line of the descending pitchfork, signaling exhausted sellers. It has failed to reach the weekly pivot point of 147.59, indicating a potential bounce back. Still, the price could drop deeper if it stays below the upper median line. However, only taking out the 50% Fibonacci line and the pivot point validates more declines towards the median line (ml). https://www.forexcrunch.com/blog/2024/02/07/usd-jpy-price-pause-downside-albeit-resisted-by-148-00/
