2023-06-23 03:54
ECB policymakers expressed concerns about the persistent inflation in the Eurozone. The ECB has raised rates by four percentage points, indicating another increase in July. Isabel Schnabel stressed the risk of continued price growth. Today’s EUR/USD outlook is bullish. On Wednesday, two German policymakers of the European Central Bank expressed concerns about the persistent inflation in the Eurozone. Consequently, they suggested that an extended period of elevated interest rates might be necessary to control it. They attributed this situation partly to the remarkably tight labor market in the region. Notably, the ECB has raised rates by four percentage points over the past year, indicating another increase in July. Furthermore, the bank anticipates it could take until 2025 to bring price growth back to the desired level of 2%. Joachim Nagel, the chief of Germany’s Bundesbank, compared inflation to a voracious creature and emphasized the need for resolute action against it. Additionally, he stated that inflation fighters must exhibit strong determination due to inflation’s stubborn nature. Moreover, Nagel argued that while headline inflation may decline rapidly in the upcoming months, the ECB’s task is incomplete. This is because underlying pressures could remain concealed. His French counterpart, Francois Villeroy de Galhau, took a more nuanced stance. He highlighted the importance of maintaining high rates for an extended period, with any additional hikes being limited. Elsewhere, market expectations reflect a July rate hike, given the ECB’s implicit commitment. Moreover, they have factored in another move in September or October, projecting a peak rate of 4%. Isabel Schnabel, another German ECB board member, also stressed the risk of continued price growth. She highlighted the potential of a challenging wage-price spiral. EUR/USD Key Events Today Investors expect data from the US on initial jobless claims and existing home sales. Furthermore, Fed Chair Jerome Powell will continue with his testimony to Congress. EUR/USD Technical Outlook: 1.1000 Resistance Might Trigger A Pullback. EUR/USD 4-hour chart EUR/USD has made a new high above the 1.0950 resistance level, strengthening the bullish bias. This comes after the price pushed off the 30-SMA support. Moreover, the RSI has entered the overbought region, suggesting solid bullish momentum. However, this is also an extreme level for bulls and might allow bears to return and retrace the recent move. Bears will return if the bulls cannot break above the 1.1000 key resistance level. A pullback would likely retest the 1.0950 key level. https://www.forexcrunch.com/eur-usd-outlook-ecb-hawks-stress-need-for-more-rate-hikes/
2023-06-16 04:50
The European Central Bank will likely raise borrowing costs on Thursday. The US Federal Reserve recently halted a series of 10 consecutive rate hikes. Inflation in the Eurozone remains unacceptably high for the ECB. Today’s EUR/USD forecast is slightly bullish. The European Central Bank will likely raise borrowing costs on Thursday, reaching their highest level in 22 years. Moreover, the bank intends to leave room for additional rate hikes as it continues to combat high inflation. This is despite a weakening Eurozone economy. In contrast, the US Federal Reserve recently halted a series of 10 consecutive rate hikes. Consequently, global investors understood that the tightening cycle in developed economies is nearing its end. However, further rate hikes in the US is still possible. On the other hand, inflation in the Eurozone remains unacceptably high for the ECB, standing at 6.1%, more than three times the target of 2%. However, underlying price growth, excluding food and energy, is only beginning to slow down. These factors will likely keep the ECB on its current path of tightening. This is because it failed to predict the current bout of high inflation and initiated rate hikes later than many other global counterparts last year. The ECB will likely raise the deposit rate for the eighth consecutive time by 25 basis points to 3.5%, reaching the highest level since 2001. Economists surveyed by Reuters expect another rate increase of the same magnitude in July, a move that several policymakers have already indicated. EUR/USD Key Events Today Investors await the ECB monetary policy meeting, where the central bank will likely lift rates by 25bps. At the same time, they expect a retail sales report from the US that will show the state of consumer spending in the country. EUR/USD Technical Forecast: Bulls Post Fresh Highs Above 1.0850. EUR/USD 4-hour chart The EUR/USD has made a new high on the 4-hour chart, indicating a continuation of the bullish trend. Bears came in for a pullback when the price reached the 1.0850 resistance level. However, the pullback is approaching the 30-SMA and the 1.0785 support level, where it will likely find strong support. If bulls are still strong enough to make new highs, the price will bounce higher to break above the 1.0850 resistance. However, bears have also gotten stronger, as seen in the big-bodied candles. This could see the price break below the 30-SMA. https://www.forexcrunch.com/eur-usd-forecast-economists-expect-ecb-to-hike-by-25bps/
2023-06-16 04:49
The US dollar experienced a strong rally following the hawkish Fed meeting. The yen weakened to its lowest point this year before the BOJ meeting. Analysts suggest that policymakers might intervene if the yen weakens rapidly. Today’s USD/JPY outlook is bullish. On Thursday, the US dollar experienced a strong rally following the Federal Reserve’s indication of future rate hikes. Now, the market focus is shifting towards upcoming central bank decisions. The yen weakened to its lowest point this year, coinciding with the Bank of Japan’s commencement of a two-day policy meeting. Elsewhere, more than half of the economists surveyed by Reuters stated that the Japanese government and central bank would take action to prevent the yen from declining further. This will happen if it reaches the 145 per US dollar level. The market closely monitors the response of the government and the Bank of Japan to currency movements. This is especially after their recent meeting when the yen approached a six-month low. 96% of the respondents in the poll expect the BOJ to maintain its current policy this week. Meanwhile, around half anticipate a reduction in easing measures, such as adjustments to the yield curve control scheme, either in July or September. Furthermore, analysts suggest that policymakers might intervene if the yen weakens rapidly. Additionally, they will intervene if the depreciation is perceived to prolong domestic inflation and impact households’ purchasing power. In May, the BOJ, finance ministry, and Financial Services Agency held a three-party talk similar to the one conducted last year. In September, this preceded Japan’s first intervention in 24 years, involving selling dollars and buying yen. USD/JPY Key Events Today Investors expect sales data from the US, a leading indicator of consumer spending and the state of the economy. Additionally, investors expect the US jobless claims report. USD/JPY Technical Outlook: Bullish Breakout Leads To A Higher High At 141.50. USD/JPY 4-hour chart outlook USD/JPY has finally broken out of consolidation in the 4-hour chart. The price shot up, breaking above the 140.25 range resistance level. This has seen the continuation of the previous bullish trend. The price traded between the 138.75 resistance and the 140.25 resistance levels for a long time. With the recent breakout, bulls have retested the 141.50 resistance, pushing farther above the 30-SMA. Additionally, the RSI now trades nearer the overbought region. The price will likely pause at 141.50 before pushing higher to make new highs. https://www.forexcrunch.com/usd-jpy-outlook-soars-amid-feds-hawkish-pause-eyes-on-boj/
2023-06-13 10:27
Traders maintained caution ahead of monetary policy decisions from various central banks. The US May inflation data will be released on Tuesday. Economists anticipate the ECB to raise its key interest rate by 25 basis points. Today’s EUR/USD forecast is bullish. The dollar fell on Monday against the euro as traders maintained caution ahead of monetary policy decisions from various central banks, including the Federal Reserve. Notably, investors will watch policy meetings by the Fed, the European Central Bank (ECB), and the Bank of Japan. These will establish the prevailing sentiment and contain indications from policymakers regarding the future trajectory of interest rates. In addition, the US May inflation data will come out on Tuesday, coinciding with the start of the Fed’s two-day meeting. Based on the CME FedWatch tool, money markets are leaning towards the Fed pausing on Wednesday. On the other hand, most economists anticipate the ECB to raise its key interest rate by 25bps this week, with another hike in July. Finally, it will halt for the remainder of the year. Aside from the specific decisions made by the central banks during these meetings, the focus will be on their forward guidance. Given the aggressive rate hikes undertaken by central banks in the past 12-15 months, there is interest in whether they are preparing for a pause. This would follow the example set by the Reserve Bank of New Zealand. Surprisingly, the RBNZ signaled that it had finished tightening, having raised rates to the highest level in over 14 years at 5.5%. EUR/USD Key Events Today No key economic releases are scheduled for today from the US or the Eurozone. Therefore, investors will likely keep speculating on the upcoming inflation report and the FOMC meeting. EUR/USD Technical Forecast: Bulls Propel To 1.0785 Resistance EUR/USD 4-hour chart EUR/USD has suddenly shot up after pausing and pulling back from the 1.0785 resistance level. The bulls returned when the price got close to the 30-SMA support. The price has now risen farther away from the SMA, strengthening the bullish bias. Moreover, the RSI has moved closer to the overbought region, signaling solid bullish momentum. However, the price is nearing the 1.0785 resistance level, where it might pause again. Given the strong momentum, bulls might cross this resistance to target the next resistance at 1.0825. Economists anticipate the ECB to raise its key interest rate by 25 basis points. The US May inflation data will be released on Tuesday. https://www.forexcrunch.com/eur-usd-forecast-dollar-weakens-ahead-of-policy-meetings/
