2024-01-08 10:54
Investors waited for more clues on the Fed’s policy outlook in the US inflation report. Business data suggested Britain’s economy was more resilient than feared in December. Data on Friday revealed a mixed picture of the US economy. Monday witnessed a bearish GBP/USD outlook, influenced by a stronger dollar, as investors breathed for additional insights into the Fed’s policy stance through the US inflation report. This crucial report keeps investors from risk assets, supporting the dollar. Moreover, investors are still absorbing data released Friday in the US and the UK. Business data suggested Britain’s economy was more resilient than feared in December. The UK’s construction sector showed a possible recovery from a decline caused by a surge in interest rates to a 15-year high of 5.25% in August. Notably, the S&P Global/CIPS UK construction Purchasing Managers’ Index for December rose to 46.8 from November’s 45.5. However, it remained below the 50.0 growth threshold for a fourth consecutive month. Additionally, data from mortgage lender Halifax revealed an annual rise in British house prices in December. It is the first in eight months, indicating stabilization in the property market. As a result, traders reduced their expectations of BoE rate cuts. Currently, they anticipate around 120 basis points of cuts in 2024, compared to the 140 bps expected on Thursday. Meanwhile, in the US, employment came in higher than expected while the unemployment rate fell. However, the US services sector weakened significantly last month, showing a mixed picture of the US economy. GBP/USD key events today Investors do not expect any key events today from the US or The UK. As such, they will continue absorbing Friday’s reports. GBP/USD technical outlook: Bulls take the lead within a range On the technical side, the pair oscillates between the 1.2800 resistance and the 1.2601 support levels, with no clear direction. However, bulls are ahead inside the range as the price sits above the 30-SMA. Moreover, the price made an engulfing bullish candle after breaking above and retesting the 30-SMA. This indicates strong bullish momentum that might propel the price to retest the range resistance near the 1.2800 level. Still, the pair will likely continue in its sideways move until either bears or bulls break out of the range. A bullish trend will emerge if the price pushes above the 1.2800 resistance. https://www.forexcrunch.com/blog/2024/01/08/gbp-usd-outlook-investors-eye-us-inflation-for-policy-guidance/
2024-01-08 09:00
A rebound in US Treasury yields supported a rally in the dollar. Data revealed stronger-than-expected US employment and wage growth in December. Canada’s economy added only 100 jobs in December. The USD/CAD forecast points northward as investor sentiment tilts towards caution, with all eyes on a pivotal US inflation report scheduled later in the week. Moreover, traders adjusted their expectations for the number and size of Fed cuts this year. Consequently, there was a rebound in US Treasury yields, which gave more support to the dollar. The upcoming US inflation reading on Thursday could further influence views on Fed rate cuts. Current market pricing indicates a 64% chance that the Fed might initiate rate cuts as early as March, compared to nearly 90% a week ago, according to the CME FedWatch Tool. Meanwhile, Friday’s data showed stronger-than-expected US employment and wage growth in December, signaling a resilient labor market. However, a separate survey on the same day revealed a significant slowdown in the US services sector last month. Notably, employment figures hit a nearly three and a half year low. On Friday, the Canadian dollar showed little change against the US dollar after a mixed job report from the US and Canada. Canada’s economy added only 100 jobs in December. Still, wages for permanent employees increased at the fastest pace in three years. As a result, money markets lean towards April for the first Bank of Canada rate cut. Furthermore, a Reuters poll suggests that if the Fed shifts to rate cuts before the Bank of Canada, the Canadian dollar will trade stronger than anticipated throughout the year. USD/CAD key events today It will be a quiet session for USD/CAD as neither the US nor Canada will release high-impact economic reports. USD/CAD technical forecast: Bullish momentum falters near 1.3350 The USD/CAD bullish move has weakened near the 1.3350 key level. Notably, the price is not swinging too far from the 30-SMA, showing buyers are weak. At the same time, although the price is moving higher, the RSI is descending, indicating a bearish divergence. If buyers regain momentum, the price will likely bounce off the 30-SMA to retest the 1.3501 resistance level. On the other hand, if the divergence plays out, there will be a shift in sentiment as the price will break below 1.3350 and the 30-SMA. Consequently, the price might drop to the 1.3200 support level. https://www.forexcrunch.com/blog/2024/01/08/usd-cad-forecast-dollar-gains-as-market-brace-for-us-inflation/
2024-01-06 11:13
Fed policymakers agreed that inflation was under control. US job openings and initial jobless claims fell. Private employment and nonfarm payrolls rose, strengthening the dollar. The GBP/USD weekly forecast is slightly bearish as the robust US labor market’s strength means a potential delay in the Fed’s rate-cut plans. Consequently, it challenges the earlier March anticipation. Ups and downs of GBP/USD The pound had a slightly bearish week where the price fluctuated amid high-impact data from the US. The week started with minutes from the Fed’s December meeting. At the meeting, policymakers agreed that inflation was under control. Additionally, a series of employment reports from the US showed a robust labor market. Job openings and initial jobless claims fell. Meanwhile, private employment and nonfarm payrolls rose, strengthening the dollar against most major currencies. Next week’s key events for GBP/USD Next week, the US will release the crucial figures showing consumer and producer inflation. Meanwhile, the UK will release data on manufacturing production and the gross domestic product. After a strong employment report from the US on Friday, all focus will be on the inflation report. Notably, Richmond Fed President Thomas Barkin stated that robust US job growth and a low unemployment rate indicate that the Federal Reserve hasn’t reached a stage where its attempts to manage inflation pose a direct tradeoff with its goal of sustaining maximum employment. Therefore, if inflation is still high, it could mean higher rates for longer. On the other hand, if inflation falls, the Fed will likely continue with its plan to cut rates this year. GBP/USD weekly technical forecast: Bullish momentum fades near the 1.2800 resistance The pound is bullish on the charts, and the price has risen to the 1.2800 resistance level. However, the bullish move has become shallower, with the price sticking close to the 22-SMA. At the same time, the slope of the SMA is not as steep as when bulls took over. These are all signs that bulls have weakened. Additionally, the RSI has made a bearish divergence, moving lower as the price makes new highs. This indicates weaker bullish momentum. Currently, the price trades with the nearest resistance at 1.2800 and the nearest support at 1.2500. Therefore, if bears take over, the price will likely retest the 1.2500 support. Meanwhile, bears could target lower support levels like 1.2202 if the divergence leads to a reversal. https://www.forexcrunch.com/blog/2024/01/06/gbp-usd-weekly-forecast-strong-nfp-pours-water-on-rate-cuts/
2024-01-06 11:04
The dollar strengthened due to upbeat employment data and reduced rate-cut bets. Analysts indicated that the jobs report means the Fed is unlikely to cut rates as soon as March. The Fed projected an approximately 75 basis points cut in rates for 2024. A surge in the dollar, fueled by an upbeat employment report, sets a bearish tone in the AUD/USD weekly forecast. The employment report showed the US economy remains hot and might need high rates for longer. Ups and downs of AUD/USD The Aussie closed the week lower as the dollar strengthened due to upbeat employment data and reduced rate-cut bets. Notably, at the start of the week, the dollar gained as investors became less confident about a March Fed rate cut. Later, the nonfarm payroll report gave it another boost. Analysts indicated that the jobs report means the Fed is unlikely to cut rates as soon as March. Moreover, they observed that the futures market would eventually align more closely with the Fed’s projection of approximately a 75 basis points cut in rates for 2024. Next week’s key events for AUD/USD The calendar for next week will feature inflation data from the US. The US will release the consumer and producer price index reports. These reports will majorly impact the pair as they will determine when the Fed will start cutting rates. A higher-than-expected reading on consumer inflation could lower bets for a rate cut as early as March. On the other hand, easing inflation would increase bets for a March cut. Consequently, it would weaken the dollar and support a rally in the pound. AUD/USD weekly technical forecast: Bears test channel support On the technical side, AUD/USD is trading in a bullish channel, respecting its support and resistance. At the same time, the price is respecting the 22-SMA support and bouncing higher every time it touches the line. Meanwhile, the RSI has traded above 50 since the price crossed above the 22-SMA, supporting bullish momentum. The bullish move recently paused at the 0.6850 resistance level, leading to a retracement. Bears managed to push the price down to a solid support zone comprising the 22-SMA and the 0.6674 support level. Moreover, the price has reached the channel support. Therefore, bulls will likely return next week to continue the uptrend from this support zone. On the other hand, if the price breaks below this zone, it will signal a shift in sentiment to bearish and a possible reversal. https://www.forexcrunch.com/blog/2024/01/06/aud-usd-weekly-forecast-dollar-strengthens-on-upbeat-nfp/
2024-01-05 12:56
The downside pressure remains high after failing to make a new higher high. A new lower low activates more declines. Positive US data should lift the greenback. The EUR/USD price lost its shine again on Friday. The pair is at 1.0913 at the time of writing. Fundamentally, the US dollar received a helping hand from upbeat US data in the last session. If you are interested in automated forex trading, check our detailed guide- The ADP Non-Farm Employment Change, Unemployment Claims, and Final Services PMI came in better than expected. Today, the Eurozone CPI Flash Estimate reported a 2.9% growth less versus the 3.0% growth expected. Core CPI Flash Estimate came in line with expectations, PPI reported a 0.3% drop, more than the 0.1% fall estimated, while German Retail Sales dropped by 2.5% compared to the 0.5% drop forecasted. Later, the US economic figures should drive the price. The Non-Farm Payrolls is expected at 168K versus 199K in the previous reporting period. Average Hourly Earnings may announce a 0.3% growth in December versus a 0.4% growth in November, while the Unemployment Rate could jump from 3.7% to 3.8%. Furthermore, the US will release the ISM Services PMI and the Factory Orders, while Canada publishes the Employment Change and Unemployment Rate. Positive US data should lift the greenback. As you can see on the H1 chart, the price found resistance at 1.0968, and now it has reached the median line (ML) of the descending pitchfork again. This represents a dynamic support, while the 1.09 psychological level represents a static downside obstacle. If you are interested in guaranteed stop-loss forex brokers, check our detailed guide- Technically, the downside pressure remains high after failing to make a new higher high. Making a new lower low and invalidating the demand zone validates more declines. A valid breakdown below the 61.8% (1.0882) can confirm a reversal. However, staging above the 1.09 level and making only false breakdowns below the immediate support level may announce a new leg higher. https://www.forexcrunch.com/blog/2024/01/05/eur-usd-price-playing-within-demand-zone-ahead-of-us-nfp/
2024-01-05 09:53
Markets expect the employment figures to show an additional 170,000 US jobs in December. Data revealed the seventh consecutive monthly contraction in Canada’s service sector. The Canadian dollar was weaker due to a decline in oil prices. The USD/CAD price analysis on Friday showed a bullish mood sparked by a stronger dollar due to reduced expectations of Fed rate cuts this year. Moreover, the currency was on hold as the market eagerly awaited the highly anticipated US payroll data later in the day. Markets expect the employment figures to show an additional 170,000 jobs in December, a decrease from the 199,000 recorded in November. If you are interested in automated forex trading, check our detailed guide- Meanwhile, the currency was mostly steady in the previous session as the Canadian dollar gave up earlier gains due to concerns about a possible recession. Notably, data revealed the seventh consecutive monthly contraction in Canada’s service sector. The decline in service sector activity in December was influenced by high borrowing costs that impacted the housing market. The business activity index was at 44.6, well below the 50 threshold separating expansion from contraction. Moreover, the index has been below 50 since June. Furthermore, the Canadian dollar was weaker due to a decline in oil prices. This decline came as significant weekly gasoline and distillate stock builds overshadowed a larger-than-expected crude stock draw. Additionally, Canada’s employment report for December, scheduled for Friday, might provide additional insights into the state of the economy. Meanwhile, data in the US on Thursday revealed that private payrolls saw a substantial increase of 164,000 jobs in the last month. It is the most significant monthly gain since August. USD/CAD key events today Canada’s Employment Change Canada’s unemployment rate US nonfarm payrolls US unemployment rate US ISM services PMI USD/CAD technical price analysis: Momentum fades at resilient resistance On the technical side, USD/CAD has stalled at the resistance zone comprising the 1.3350 resistance level and the 0.382 fib level. The indicators on the chart point to a bullish bias, with the 30-SMA moving up and trading below the price and the RSI above 50. If you are interested in guaranteed stop-loss forex brokers, check our detailed guide- However, bulls might be exhausted as the RSI has made a slight bearish divergence. Although the price is steady at the resistance zone, the RSI shows progressively weaker momentum. Consequently, we might get a drop to retest the 30-SMA support or lower. Bulls can only continue the uptrend if they regain momentum and keep the price above the 30-SMA. https://www.forexcrunch.com/blog/2024/01/05/usd-cad-price-analysis-fed-rate-cut-bets-lower-eyes-on-nfp/
