2024-09-20 10:49
Japan’s central bank met on Friday and decided to keep interest rates unchanged. Ueda’s speech after the meeting contained little on future rate hikes. The US Central Bank lowered borrowing costs by 50-bps on Wednesday. The USD/JPY price analysis shows the yen crashing after the Bank of Japan policy meeting. Although the central bank held rates as expected, Governor Ueda refrained from giving clear guidance on rate hikes. Instead, he focused on the economy. Japan’s central bank met on Friday and decided to keep interest rates unchanged. Moreover, the central bank’s forecasts showed that consumption in Japan’s economy would increase. Such an outlook favors rate hike expectations as policymakers will be more willing to hike when demand is high. However, Governor Ueda’s speech after the meeting contained little on future rate hikes. He kept from giving clear signals on rate hikes, which disappointed investors who had expected more hawkish remarks. Ueda noted that future decisions would depend on the economy, which was a cautious statement. Meanwhile, the Fed has started its rate-cutting cycle aggressively. The US Central Bank lowered borrowing costs by 50-bps on Wednesday, shrinking the gap in interest rates between Japan and the US. Moreover, Powell’s speech indicated confidence that the fight against inflation was successful. Therefore, there will be more rate cuts in the future. Although the yen collapsed on Friday, the future is bright. Lower interest rates in the US will continue to reduce the interest rate differentials between the two countries, weakening the popularity of the carry trade. At the same time, economists expect at least one more rate hike this year in Japan, which could boost the yen. USD/JPY key events today Investors will continue digesting the outcome of the Bank of Japan policy meeting, as there will be no other key economic releases. USD/JPY technical price analysis: Price charges past resistance zone On the technical side, the USD/JPY price broke above a solid resistance zone with a bullish engulfing candle. Initially, the price paused at the 0.5 Fib level, where bears triggered a pullback to the 30-SMA. However, the price stayed above the SMA and the RSI above 50, retaining the bullish bias. Soon after, bulls returned with massive strength and pushed above the 143.01 resistance and the 0.5 Fib. The bullish engulfing candle closed above these levels, showing a clear break. The price is now aiming for the next hurdle at the 145.00 level. https://www.forexcrunch.com/blog/2024/09/20/usd-jpy-price-analysis-yen-plunges-as-ueda-dodges-hike-signals/
2024-09-20 09:02
The US dollar remained fragile on Friday after the FOMC policy meeting on Wednesday. Data on Thursday revealed that US unemployment claims fell significantly. The Bank of England kept interest rates unchanged on Thursday. The GBP/USD outlook shows solid bullish momentum after a supersized Fed rate cut and a pause by the Bank of England. The massive Fed rate cut weighed on the dollar, which fell against most major peers. Meanwhile, the Bank of England held rates after a cut in the last meeting, boosting the pound. The US dollar remained fragile on Friday after the FOMC policy meeting on Wednesday, which resulted in a 50-bps rate cut. Economists had forecast a smaller 25-bps rate cut. Meanwhile, traders were pricing a 65% chance of a massive cut. Nevertheless, it came as a surprise to some, putting pressure on the greenback. The Fed lowered borrowing costs significantly despite signs that the economy is stable. According to Powell, the cut was meant to keep the unemployment rate low. At the same time, it revealed confidence that high rates had finally tamed inflation. Still, there were fears that the rate cut was a sign of a bleak future for the US economy. Meanwhile, data on Thursday revealed that US unemployment claims fell significantly, showing tight labor market conditions. More upbeat data would increase the likelihood of a soft landing for the Fed. On the other hand, the Bank of England kept interest rates unchanged on Thursday as expected. Inflation in the UK has eased significantly. However, the central bank is focused on service inflation which came above estimates. GBP/USD key events today There won’t be any key economic reports from the UK or the US today. Therefore, the pair might consolidate after recent gains. GBP/USD technical outlook: Bulls struggling to sustain above 1.3300 On the technical side, the GBP/USD price has met the 1.3301 key resistance level. Although the bias is bullish and the price has made a higher high, it might soon retreat to retest the 30-SMA. The recent rally pushed the price far above the SMA. At the same time, the RSI rose to trade near the overbought region. However, it made a bearish divergence with the price, indicating weaker bullish momentum. If this divergence plays out, the price might soon drop. Still, the bullish trend will continue if it stays above the SMA. https://www.forexcrunch.com/blog/2024/09/20/gbp-usd-outlook-fed-boe-divergence-boosts-sterling/
2024-09-19 10:16
The US Central Bank finally cut borrowing costs by 50-bps after months of market speculation. Powell said the massive cut was meant to keep unemployment in check. At the policy meeting on Friday, the BoJ will likely keep rates unchanged. The USD/JPY outlook favors the upside, though the pair has fluctuated a lot since the FOMC policy meeting. Initially, the yen strengthened against the dollar before falling sharply as market participants took profits. Meanwhile, markets are preparing for the Bank of Japan policy meeting on Friday. The US central bank finally cut borrowing costs on Wednesday after months of market speculation. The Fed lowered interest rates by a significant 50-bps, above forecasts of 25-bps. Before the meeting, market participants were pricing a 65% chance of such an outcome. Meanwhile, economists had predicted a smaller cut. Therefore, after the meeting, the dollar fell as traders had not fully priced such a move. However, the decline was short-lived as it recovered as traders locked in their yen profits. The Fed has taken its first step to lower interest rates, showing increased confidence among policymakers that they have tamed inflation. Furthermore, Powell said the massive cut was meant to keep unemployment in check. Lower borrowing costs will likely hurt the dollar. However, they will also spur economic growth, which will eventually reverse the downtrend. On the other hand, the yen’s prospects remain bright in the long run. Bank of Japan policymakers have recently voiced hawkish remarks in support of more rate hikes. At the policy meeting on Friday, the BoJ will likely keep rates unchanged. However, the market focus will be on messaging for future policy moves. More hawkish remarks will support the yen. USD/JPY key events today US unemployment claims USD/JPY technical outlook: Bulls meet strong barrier soon after reversal On the technical side, the USD/JPY price has made a new high near a solid resistance zone. The trend recently reversed after the RSI made a bullish divergence. Bulls took charge when the price broke above the 30-SMA, and the RSI started trading in bullish territory above 50. However, the new rally has met a solid hurdle comprising the 0.5 Fib and the 143.01 key resistance level. The price probably needs a strong catalyst to breach this zone. A break above would allow bulls to revisit the 145.00 key resistance level and continue the uptrend. https://www.forexcrunch.com/blog/2024/09/19/usd-jpy-outlook-fed-decision-triggers-wild-swings/
2024-09-19 09:29
The Australian economy added 47,500 jobs in August, beating estimates of 26,400. The RBA has remained cautious as other major central banks lower borrowing costs. The US central bank lowered borrowing costs by a significant 50-bps, putting pressure on the greenback. The AUD/USD forecast shows a steep climb in the pair after better-than-expected Australian employment figures. At the same time, market participants were still reeling from the US central bank’s super-sized rate cut. Data early on Thursday revealed that the Australian economy added 47,500 jobs in August, beating estimates of 26,400. The jump pointed to a resilient economy, reducing the chances of an RBA rate cut this year. Furthermore, the unemployment rate held steady at 4.2%. The RBA has remained cautious as other major central banks lower borrowing costs. Policymakers have noted that stubborn inflation might push back the timing for the first rate cut to some time next year. Initially, market participants were hoping for a rate cut in December. However, after the jobs report rate cut, expectations fell, boosting the Australian dollar. Notably, the RBA remains an outlier after the Fed implemented its first rate cut on Wednesday. Consequently, the Australian dollar has an edge over most of its peers. The US central bank lowered borrowing costs by a significant 50-bps, putting pressure on the greenback. For months, traders have been speculating on the timing and size of the first rate cut. Initially, data had supported a smaller cut. However, this changed late last week after several key sources suggested a more significant rate cut. The Fed delivered the significant rate cut and forecasted more to come. More rate cuts in the US while the RBA remains cautious will likely keep the Aussie on the front foot. AUD/USD key events today US unemployment rate AUD/USD technical forecast: Bulls break above 0.6800 On the technical side, the AUD/USD price has broken above the 0.6800 resistance level. The steep move has pushed the price well above the 30-SMA, strengthening the bullish bias. At the same time, the RSI is entering the overbought region, indicating a surge in bullish momentum. Bulls have set their sights on the 0.6850 key level. However, after such a steep climb, the price might pause and pull back to retest the 0.6800 level before continuing higher. https://www.forexcrunch.com/blog/2024/09/19/aud-usd-forecast-aud-rallies-on-surprising-employment-gains/
2024-09-18 10:32
UK service inflation rose by 5.6, above expectations for a 5.5% increase. The Bank of England will likely keep rates unchanged this week. US sales increased by 0.1% when estimates had shown a 0.2% decline in August. The GBP/USD forecast points to bullish optimism after UK services inflation data came in higher than expected. Meanwhile, the dollar was steady after rebounding in the previous session due to better-than-expected retail sales data. UK inflation held steady at 2.2% in August, meeting forecasts. However, market participants focused on service inflation, which rose by 5.6%, above expectations for a 5.5% increase. The Bank of England has remained cautious despite inflation reaching its target. Policymakers have been monitoring stubborn service price pressures. The report increased the likelihood that the Bank of England will keep rates unchanged this week. A separate report revealed that UK house prices increased by a slower 2.2% in July. Nevertheless, it was the fifth month in a row that prices increased. A pause by the BoE and a significant rate cut in the US could keep sterling on an upward trajectory. Notably, the dollar recovered on Tuesday after US retail sales jumped. Sales increased by 0.1% when estimates had shown a 0.2% decline in August. The increase showed that consumer spending remained strong, pointing to a resilient economy. Although it supported a smaller Fed rate cut, it was not enough to significantly change current expectations. Market participants are pricing a 63% chance of a 50-bps rate cut. Such an outcome could sink the dollar. Moreover, they will focus on messaging for future policy moves. GBP/USD key events today Federal Funds Rate FOMC Economic Projections FOMC Statement FOMC Press Conference GBP/USD technical forecast: Bulls make another attempt at 1.3200 On the technical side, the GBP/USD price is breaking above the 1.3200 resistance level. Previously, the price had briefly breached this level before pulling back. However, there was a surge in bullish momentum before the price reached the 30-SMA. However, to confirm a break above 1.3200, the price must detach from this level to make new highs. In such a case, bulls would likely revisit the 1.3301 level. The bullish trend will continue if the price stays above the 30-SMA with the RSI above 50. https://www.forexcrunch.com/blog/2024/09/18/gbp-usd-forecast-uk-services-inflation-beat-expectations/
2024-09-18 09:10
Canada’s inflation fell by 0.2% monthly, surprising economists who had forecast no change. Data revealed that US retail sales unexpectedly increased by 0.1%. The likelihood of a 50-bps Fed rate cut remains high at 63%. The USD/CAD price analysis shows mild bullish momentum as the Canadian dollar remains fragile after softer-than-expected inflation data. At the same time, the dollar was steady as sales data pointed to a gradual start to Fed rate cuts. Data on Tuesday showed that inflation fell by 0.2% monthly, surprising economists who had forecast no change. Inflation in Canada has consistently fallen, reaching the Bank of Canada’s target. As a result, experts believe the central bank might increase the size of future rate cuts. Consequently, the Canadian dollar might come under pressure, allowing USD/CAD to climb. However, the dollar’s upside potential is also low since the Fed is preparing to start lowering borrowing costs. The dollar increased on Tuesday after data revealed that US retail sales unexpectedly increased by 0.1%. Economists had expected sales to drop by 0.2%. The upbeat report briefly boosted the dollar, supporting the case for a small Fed rate cut on Wednesday. Nevertheless, the likelihood of a 50-bps cut remains higher at 63%. Market expectations shifted towards the end of last week when news outlets indicated a high probability of a massive Fed rate cut. Furthermore, market participants will focus on the messaging for future moves during the policy meeting. A dovish outlook could weigh on the dollar. On the other hand, a small rate cut and a cautious outlook for the future might boost the greenback. USD/CAD key events today Federal Funds Rate FOMC economic projections FOMC statement FOMC press conference USD/CAD technical price analysis: Bulls attempting a consolidation breakout On the technical side, the USD/CAD price has remained in its tight range, slightly below the 1.3600 critical level. Although bulls are in the lead, they are not committed to pushing the price far above the SMA. This is a sign of indecision or a pause due to exhaustion. The price sits slightly above the SMA with the RSI above 50. Therefore, the indicators support bulls. A surge in momentum might push USD/CAD above the 1.3600 resistance level. A break above this level would clear the path for the price to retest the 1.3701 resistance level. https://www.forexcrunch.com/blog/2024/09/18/usd-cad-price-analysis-cad-vulnerable-after-downbeat-cpi/
