2024-09-17 10:37

The greenback was on the back foot as traders positioned themselves ahead of the FOMC policy meeting. Economists predict a 0.2% decline in US retail sales. Forecasts show that UK consumer inflation might hold at 2.2%. The GBP/USD price analysis indicates continued strength as the pound climbs to new highs while the dollar falls due to a surge in bets for a 50-bps Fed rate cut. At the same time, market participants eagerly anticipate UK inflation data and the Bank of England policy meeting. On Tuesday, the greenback was on the back foot as traders positioned themselves ahead of the FOMC policy meeting. Futures show a higher chance of a 50-bps rate cut than a 25-bps rate cut. This shift in expectations came on Friday after dovish reports from major US news outlets. At the same time, a retired Fed official said there was a strong case for a significant rate cut on Wednesday. However, this outlook might change again after the US retail sales report. Economists predict a 0.2% decline in sales. A bigger-than-expected drop in sales could bolster bets for a massive cut, further weighing on the dollar. On the other hand, if sales come in higher than expected, bets for a smaller cut will increase. In this case, the dollar would climb. Meanwhile, in the UK, market participants are waiting to see the state of inflation. According to forecasts, consumer inflation might hold at 2.2%. However, the core rate might increase. Currently, the market expects the Bank of England to keep rates unchanged. Nevertheless, rate cut expectations have risen, with the likelihood of a 25-bps cut climbing from 20% to 38%. GBP/USD key events today US core retail sales m/m US retail sales m/m GBP/USD technical price analysis: Bulls breach 1.3200 level On the technical side, the GBP/USD price has broken above the pivotal 1.3200 level. The bullish bias is strong since the price sits well above the SMA. At the same time, the RSI trades near the overbought region. Notably, the last time the price reached the 1.3200 resistance, bears quickly took over with a massive candle. Furthermore, the RSI did not enter the overbought region. However, this time, bullish momentum is stronger. Therefore, the price might soon reach the 1.3301 level. https://www.forexcrunch.com/blog/2024/09/17/gbp-usd-price-analysis-feds-50-bps-rate-cut-bets-surge/

2024-09-17 08:53

The Canadian dollar has remained subdued ahead of crucial inflation data. Price pressures in Canada might cool from 2.5% in July to 2.1% in August. The greenback is under pressure as market participants increasingly bet on a supersized rate cut. The USD/CAD outlook shows indecision as investors await key events in Canada and the US. Canada will release significant data on inflation, giving more guidance on the next Bank of Canada policy move. Meanwhile, market participants eagerly await the Fed’s policy meeting on Wednesday. Most major US peers have risen since Friday due to increased Fed rate cut expectations. However, the Canadian dollar has remained subdued ahead of crucial inflation data. The Bank of Canada has cut interest rates three times since June. Moreover, policymakers have indicated a willingness to increase the size of cuts depending on economic performance. Inflation in Canada has eased significantly and is nearing 2%. Economists predict today’s CPI report will show price pressures cooling from 2.5% in July to 2.1% in August. Such an outcome would give the BoC more room to continue lowering borrowing costs, weighing on the Canadian dollar. On the other hand, the greenback is under pressure as market participants increasingly bet on a supersized rate cut. Since Friday, the likelihood of a 50-bps rate cut has risen, reaching 59%. Nevertheless, there is still a high chance of a smaller cut. As a result, traders are awaiting the US retail sales report for more clues on the size of the first cut. USD/CAD key events today Canada CPI m/m Canada median CPI y/y Canada trimmed CPI y/y US core retail sales m/m US retail sales m/m USD/CAD technical outlook: Consolidation under 1.3600 On the technical side, the USD/CAD price trades in a tight range between the 30-SMA and the 1.3600 resistance level. Nevertheless, the bias remains bullish, with the price above the SMA and the RSI over 50. Bulls took charge when the previous downtrend paused at the 1.3450 support level. However, the bullish trend has paused below the 1.3600 key psychological level. There is a high chance the price will soon breach this resistance since bullish momentum remains strong. However, if bears take over, it will break below the SMA to target the 1.3450 support level. https://www.forexcrunch.com/blog/2024/09/17/usd-cad-outlook-indecision-ahead-of-canadas-cpi-fomc/

2024-09-16 10:23

ECB president Christine Lagarde said there was no predetermined rate-cut path. The likelihood of another 25-bps ECB rate cut fell from 30% to 20%. Former Fed policymaker Bill Dudley noted a solid case for a 50-bps rate cut. The EUR/USD outlook is inclined to the upside after ECB officials failed to give clear guidance on future rate cuts. The cautious tone led to a decline in ECB rate cut expectations, strengthening the euro. At the same time, the dollar remained vulnerable after news outlets on Friday renewed bets for a 50-bps Fed rate cut this week. On Thursday, the European Central Bank cut rates by 25-bps as expected. However, market participants had expected clear guidance on futures rate cuts. ECB president Christine Lagarde said there was no predetermined path for rate cuts. Therefore, the central bank will decide on a meeting-by-meeting basis. Furthermore, she noted that service inflation remains high. Market participants took this message as a lower chance of another rate cut in October. As a result, the likelihood of another 25-bps rate cut fell from 30% to 20%. A gradual pace for rate cuts in the Eurozone could diverge with an expected aggressive Fed rate-cutting cycle. Notably, expectations for a super-sized September Fed rate cut on Friday soared. Former Fed policymaker Bill Dudley noted a solid case for a 50-bps rate cut. The jump in rate-cut bets continued on Monday, putting pressure on the greenback. Nevertheless, the outlook remains uncertain since the likelihood of a 25-bps cut is also high. Therefore, the outcome on Thursday might catch some people off guard, causing turmoil in the markets. EUR/USD key events today Market participants are not looking forward to any high-impact events today. Therefore, the pair might have a slow day. EUR/USD technical outlook: Bulls eying 1.11151 On the technical side, the EUR/USD price has risen to challenge its previous high. The bullish bias is strong since the price sits well above the 30-SMA. At the same time, the RSI trades near the overbought region. The trend reversed after the RSI made a bullish divergence with the price. Bulls are now approaching the 1.1151 key resistance. A break above this level would solidify the bullish bias and confirm a new uptrend. Furthermore, it would clear the path for the price to revisit the 1.1200 critical resistance level. https://www.forexcrunch.com/blog/2024/09/16/eur-usd-outlook-ecb-unclear-on-rate-cuts-eyes-on-fomc/

2024-09-16 08:59

The dollar lost around 1.3% against the yen last week. News outlets revealed a high chance for a 50 bps Fed rate cut. The Bank of Japan will meet on Friday. The USD/JPY forecast indicates further declines for the dollar due to a surge in Fed rate cut expectations. At the same time, the yen was on the front foot as investors looked forward to the Bank of Japan policy meeting. The dollar lost around 1.3% against the yen last week after reports that the Fed might consider a more significant rate cut at this week’s meeting. Initially, markets were convinced that policymakers would vote for a 25 bps cut. Inflation was slightly higher than expected, and the labor market was not in such a terrible shape. Therefore, the US central bank could afford to start cutting rates slowly. However, this outlook shifted on Friday when news outlets revealed a high chance for a 50 bps rate cut. Consequently, investors moved to price a higher chance for such an outcome, weighing on the dollar. By Monday, investors were pricing a 59% of a 50 bps rate cut. At the same time, total cuts in 2024 rose to 125 bps. The Fed is poised to cut rates on Wednesday. However, traders are still betting between a 25 and a 50 bps rate cut. Therefore, whichever size the central bank picks will likely increase market volatility. On the other hand, the Bank of Japan is set to meet on Friday this week. Although the BoJ might keep rates unchanged, the messaging might be hawkish. Recent remarks from policymakers have shown that they are willing to keep hiking interest rates. USD/JPY key events today With a holiday in Japan and no key events in the US, the price might extend last week’s move. USD/JPY technical forecast: Bullish RSI divergence fails On the technical side, the USD/JPY price has made a new low in the downtrend after breaking below the 141.01 support level. This has strengthened the bearish bias as the price has fallen well below the 30-SMA with the RSI in the oversold region. Previously, the price had paused at the 141.01 level. Here, the RSI indicated a bullish divergence, signaling a reversal. However, when bulls took over, they failed to breach the 30-SMA, a sign that bears remain in the lead. This downtrend might soon reach the 139.02 support level. https://www.forexcrunch.com/blog/2024/09/16/usd-jpy-forecast-140-0-broken-amid-rising-fed-rate-bets/

2024-09-15 08:06

The UK labor market showed resilience, with jobless claims plunging. US data showed higher-than-expected consumer and producer prices. Experts believe the US central bank will cut rates by 25 bps. The GBP/USD weekly forecast supports a bullish trend as the FOMC meeting could lead to further weakness for the greenback. Ups and downs of GBP/USD The GBP/USD pair had a bullish week after a mix of UK and US economic reports. Notably, the UK labor market showed resilience, with jobless claims plunging. Meanwhile, the economy stagnated, with no growth, indicating a weaker-than-expected recovery. On the other hand, US data showed higher-than-expected consumer and producer prices, reducing the likelihood of a super-sized rate cut. Consequently, the dollar rose. However, this changed late on Thursday after reports indicated that a 50 bps rate cut was a close call. The dollar dropped, allowing the pound to close on a bullish candle. Next week’s key events for GBP/USD Next week, high-impact UK events will include the consumer inflation and retail sales reports and the Bank of England policy meeting. Meanwhile, in the US, the market will focus on the FOMC meeting and retail sales data. Experts believe the US central bank will cut rates by 25 bps. However, there is still uncertainty regarding this, as some expect a more significant cut. Therefore, there might be a lot of volatility in the markets on Wednesday. Meanwhile, the Bank of England might keep rates unchanged owing to recent better-than-expected economic data. However, this outlook might change if inflation eases more than expected. GBP/USD weekly technical forecast: Bulls resurface at solid support zone On the technical side, the GBP/USD price is on a developed bullish trend, with higher highs and higher lows. At the same time, the price has traded mostly above the 22-SMA, a sign that bulls are in the lead. Meanwhile, the RSI has traded in bullish territory, touching the overbought region several times. The uptrend recently reached the 1.3200 critical resistance level, but the price failed to sustain a move above it. Consequently, bears took charge, triggering a pullback to the 22-SMA support. The SMA coincided with the 1.3000 psychological level and the 0.382 Fib, creating a solid support zone. The price has made a strong bullish candle that shows it might bounce higher to retest the 1.3200 level. A higher high will strengthen the bullish bias. https://www.forexcrunch.com/blog/2024/09/15/gbp-usd-weekly-forecast-fomc-may-spell-trouble-for-the-dollar/

2024-09-14 17:13

The dollar fell due to renewed bets for a 50 bps September Fed rate cut. Several Bank of Japan policymakers drummed up support for more rate hikes. Investors will focus on the FOMC and BoJ policy meetings. The USD/JPY weekly forecast indicates a potential collapse if the Fed cuts by 50-bps and the Bank of Japan delivers a hawkish meeting. Ups and downs of USD/JPY USD/JPY has fallen and closed on a bearish candle in the past week. This came as the dollar collapsed while the yen strengthened. The dollar fell due to renewed bets for a 50 bps rate cut towards the end of the week. Initially, inflation reports had pointed to a smaller cut. On the other hand, the yen rallied as several Bank of Japan policymakers drummed up support for more rate hikes. Next week’s key events for USD/JPY Next week, investors will focus on the FOMC policy meeting and retail sales data from the US. At the same time, the Bank of Japan will hold its policy meeting on Friday. Investors have waited for the September Fed meeting for a long time. The Fed will likely pivot at this meeting, implementing its first rate cut. However, investors are unsure whether this will be 25 or 50 bps. A small rate cut could boost the dollar as it would precede a gradual pace for easing. On the other hand, a large rate cut would sink the greenback. Meanwhile, the Bank of Japan might maintain rates for now. However, economists are pricing another rate hike before the year ends. USD/JPY weekly technical forecast: Bullish divergence near 140.07 On the technical side, the USD/JPY price has made a new low in the downtrend after breaking below the 144.00 support level. Bears have remained in charge since the price broke below the 22/SMA, and the RSI dipped below 50. Since then, the price has declined steeply and paused near the 140.07 support level. However, bears have weakened with time, and the price started consolidating near the 22-SMA. At the same time, the RSI has made a bullish divergence, indicating fading bearish momentum. Therefore, the tides might soon change. If bears fail to breach the 140.07 support, the price might reverse to challenge the 22-SMA and the 144.00 level. A break above the SMA would indicate a shift in sentiment. On the other hand, if the SMA holds firm, the downtrend might continue. https://www.forexcrunch.com/blog/2024/09/14/usd-jpy-weekly-forecast-fed-cut-hawkish-boj-to-trigger-bears/