2024-08-07 10:41
BoJ Deputy Governor Shinichi Uchida said the central bank should pause due to the recent volatility in global markets. The US dollar steadied as Fed rate cut expectations eased slightly. Investors are pricing a 70% chance of a Fed cut in September. The USD/JPY forecast points North as the pair reverses its sharp decline. The yen plummeted after a Bank of Japan official dampened hopes for a near-term rate hike. Meanwhile, the dollar steadied as Fed rate cut expectations eased slightly. -Are you looking for automated trading? Check our detailed guide- On Wednesday, BoJ Deputy Governor Shinichi Uchida said the central bank should pause due to the recent volatility in global markets. These remarks reduced the likelihood of a near-term rate hike in Japan. The Bank of Japan raised rates for the second time last week, boosting the yen and reducing the gap in interest rates between Japan and the US. As a result, investors gave up the carry trade that had thrived amid wide interest rate differentials. Initially, investors had borrowed the yen at low rates to buy dollar assets for higher returns. However, the carry trade could lose popularity now that the BoJ is hiking and the Fed is about to cut rates. Consequently, the yen might recover beyond the recent 7-month peak. However, this depends on how fast the BoJ will tighten its monetary policy. A slow pace might keep pressure on Japan’s currency. Meanwhile, the US dollar steadied as Fed rate cut expectations eased slightly. After last week’s jobs report, markets moved to price an 85% chance of a 50-bps rate cut in September. However, upbeat US service activity data eased recession fears and lowered the chances of this rate cut. Currently, there is a lower 70% chance of a rate cut in September. USD/JPY key events today Investors might pause and reflect on the recent volatility as there are no high-impact releases from the US or Japan. USD/JPY technical forecast: Bulls break above the 30-SMA On the technical side, the USD/JPY price has broken above the 30-SMA with a solid bullish candle. At the same time, the RSI now trades above 50, in bullish territory. These changes indicate a shift in sentiment to bullish. The previous bearish trend paused near the 142.56 key level, where bulls resurfaced. -If you are interested in forex day trading then have a read of our guide to getting started- If the price sustains a move above the 30-SMA, it might retest the 150.03 resistance level. However, the price must start making higher highs and lows to confirm a new trend. https://www.forexcrunch.com/blog/2024/08/07/usd-jpy-forecast-yen-falls-sharply-after-rate-hike-hopes-dim/
2024-08-07 08:58
Data from Canada revealed an unexpected trade surplus of C$638 million in June. Canada’s services PMI edged higher from 47.1 to 47.3 in July. Oil prices rose on Wednesday as focus shifted to the escalating Middle East tensions. The USD/CAD price analysis paints a bearish picture as the Canadian dollar recovers after upbeat economic data. At the same time, the loonie got a boost from rising oil prices and a pause in the US stock market sell-off. -Are you looking for automated trading? Check our detailed guide- Data on Tuesday revealed an unexpected trade surplus of C$638 million in June as oil shipments in Canada increased. Meanwhile, economists had expected a deficit of C$ 1.84 billion. Separate data on Tuesday showed that Canada’s services PMI increased from 47.1 to 47.3 in July. However, since the figure remains below 50, business activity is low. Moreover, the sector is in contraction rather than expansion. Notably, Canada’s economy has slowed significantly due to high borrowing costs, and inflation has cooled. For this reason, the Bank of Canada has cut rates twice this year. Furthermore, markets are betting on another rate cut in September. Meanwhile, oil prices rose on Wednesday as focus shifted to the escalating Middle East tensions. Notably, Hamas has chosen a new leader to succeed the one recently assassinated in Iran. A rally in oil is bullish for the Canadian dollar, a commodity currency. Further strength for the loonie came from increased risk sentiment as Wall Street recovered from its sell-off. Meanwhile, the dollar was steady despite increased Fed rate cut expectations. USD/CAD key events today Investors are not expecting any critical economic reports from the US or Canada. Therefore, the price might consolidate. USD/CAD technical price analysis: Price drops as market sentiment shifts On the technical side, the USD/CAD price is falling after a recent shift in sentiment. Bears took control when the previous bullish trend failed to go beyond the 1.3900 key resistance level. The reversal started with a bearish divergence in the RSI, which showed fading bullish momentum. At the same time, the price made a solid doji candlestick, showing indecision at a critical resistance level. -If you are interested in forex day trading then have a read of our guide to getting started- Soon after, bears took control with a break below the 30-SMA and the 1.3802 support. The price is now on the verge of breaking below the 0.5 Fib level, allowing bears to revisit the 1.3701 support. https://www.forexcrunch.com/blog/2024/08/07/usd-cad-price-analysis-upbeat-data-lifts-canadian-dollar/
2024-08-06 10:42
The RBA kept rates unchanged on Tuesday and dimmed hopes for a rate cut this year. The likelihood of an RBA rate cut in November fell from 88% to 55%. The ISM released data showing a surge in business activity in the US services sector. The AUD/USD price analysis shows bears in the lead as the Aussie falls despite a hawkish Reserve Bank of Australia policy meeting. Notably, the dollar recovered as fears of a US recession eased after upbeat economic data. -Are you looking for automated trading? Check our detailed guide- The RBA kept rates unchanged on Tuesday and dashed hopes for a rate cut this year. Policymakers noted that inflation would fall at a more gradual pace. Moreover, officials discussed hiking interest rates but decided to keep them steady. The RBA has remained mostly hawkish, with markets expecting the first rate cut next year. However, the recent CPI report changed this outlook. Underlying inflation eased more than expected in the second quarter, so, investors were hoping for a more dovish outlook at the meeting. Unfortunately, this was not the case. After the meeting, the likelihood of an RBA rate cut in November fell from 88% to 55%. The Aussie gained after the meeting but soon fell as focus shifted to the rebounding dollar. On Monday, the ISM released data showing a surge in business activity in the US services sector. The PMI rose to 51.4, beating expectations for an increase to 51.0. This report offset some of the fears that the economy was heading for a recession. Moreover, it led to a slight drop in Fed rate cut expectations. AUD/USD key events today After the RBA policy meeting, investors are not expecting any more major reports. Therefore, they will continue to absorb the meeting’s outcome. AUD/USD technical price analysis: Bullish RSI divergence On the technical side, the AUD/USD price is falling after retesting the 30-SMA resistance. Initially, bulls punctured the SMA, intending to take control. However, they failed to sustain the move, allowing bears to regain control. With this new swing, the price might revisit the 0.6400 support level. -If you are interested in forex day trading then have a read of our guide to getting started- However, recent price action shows that bears are struggling to push prices lower. Notably, the RSI has made a strong bullish divergence, indicating weaker bearish momentum. Moreover, the price has mostly remained near the 30-SMA. Therefore, if bears cannot continue lower, the price might break above the 30-SMA and the 0.6550 resistance. https://www.forexcrunch.com/blog/2024/08/06/aud-usd-price-analysis-bears-dominate-despite-hawkish-rba/
2024-08-06 09:22
Investors panicked on Monday that the US economy was heading for a recession. The ISM reported that the services PMI rose from 48.8 in June to 51.4 in July. Markets are pricing in a 75% chance of a 50-bps Fed rate cut in September. The USD/JPY outlook is slightly bullish as the yen pauses its five-session rally. At the same time, the dollar recovered after data in the previous session revealed a rebound in the US services sector in July. -Are you looking for automated trading? Check our detailed guide- The yen retreated after reaching a new high in the previous session amid safe-haven demand. Notably, there was panic in the markets on Monday that the US economy was heading for a recession. These fears came from recent economic data showing a surge in the unemployment rate to a three-year high of 4.3%. Furthermore, US equities sold off due to poor earnings reports, which fueled recession fears. Traditional safe-haven assets like the yen have gained amid these concerns. However, this rally paused Monday after the US released service sector activity data. The ISM reported that the services PMI rose from 48.8 in June to 51.4 in July, which was higher than the forecast of 51.0. The services sector returned to expansion, reducing some of the fears of a recession. Additionally, rate cut expectations eased slightly. Markets are now pricing in a 75% chance of a 50-bps Fed rate cut in September. Nevertheless, rate-cut expectations will remain high if inflation continues easing and the economy slows. This will weigh on the dollar and keep the yen strong. At the same time, if the BoJ continues tightening monetary policy, the outlook for USD/JPY will remain bleak. USD/JPY key events today There won’t be any major releases from the US or Japan. Therefore, the pair might consolidate. USD/JPY technical outlook: Bulls resurface as downtrend pauses On the technical side, the USD/JPY price has pulled back to retest the 145.05 key level. Although the downtrend has paused, the bearish bias remains strong. The price trades below the 30-SMA, and the RSI is below 50. -If you are interested in forex day trading then have a read of our guide to getting started- Therefore, if the pullback continues, the price might retest the 30-SMA resistance before making new lows. However, if bears are ready, they might return at the 145.05 level, to push the price to the next support at 140.00. A lower low will confirm the continuation of the downtrend. https://www.forexcrunch.com/blog/2024/08/06/usd-jpy-outlook-dollar-rebounds-on-upbeat-pmi-data/
2024-08-05 10:30
Traders were rushing for safety amid fears of a recession in the US. Data on Friday revealed a sharp slowdown in US job growth in July. The pound remained fragile after the Bank of England cut interest rates last week. The GBP/USD outlook favors the bears, with the pound hovering near a one-month low amid poor market risk appetite. Investors are dumping risky assets amid a wave of global economic uncertainty. On Monday, traders were rushing for safety amid fears of a recession in the US. Furthermore, there were worries about China’s economy, which has performed dismally. Notably, data on Friday revealed a sharp slowdown in US job growth in July. The economy added a smaller-than-expected 114,000 jobs while the unemployment rate rose to 4.3%. The figures led to a surge in Fed rate cut bets, with investors now expecting a 50-bps cut in September. Furthermore, recent data from the US has revealed cooler-than-expected inflation. Therefore, if inflation is falling and the economy deteriorating, the Fed might fail to achieve a soft landing. Moreover, there is now more pressure on the central bank to lower borrowing costs. This trend of weak economic performance is spreading across major economies. The period of high inflation is coming to an end. Policymakers are now grappling with the effects of prolonged high interest rates. As a result, there is increased economic uncertainty, which is hurting the appetite for risk. Additionally, the pound remained fragile after the Bank of England cut interest rates last week. This was the central bank’s first rate cut in four years. Moreover, investors expect one more cut before the year ends. GBP/USD key events today US ISM Services PMI GBP/USD technical outlook: RSI indicating a corrective bearish move On the technical side, the GBP/USD price has fallen after retesting the 30-SMA resistance. The downtrend remains intact because the price has stayed below the 30-SMA. At the same time, the RSI has traded below 50 in bearish territory. -If you are interested in forex day trading then have a read of our guide to getting started- However, while the price has made consistent lower lows, the RSI has traded sideways. Therefore, bearish momentum has plateaued, indicating a corrective move. If there is no surge in momentum, bulls might take control with a break above the 30-SMA. However, if bears remain in control, the price will break below the 1.2700 level to make new lows. https://www.forexcrunch.com/blog/2024/08/05/gbp-usd-outlook-struggling-under-1-28-amid-risk-off-tone/
2024-08-05 09:01
The US economy added 114,000 jobs, below estimates of 175,000. The likelihood of a 50-bps September Fed cut has risen to 80%. Middle East tensions continued with threats of retaliation. The USD/JPY forecast leans bearish, with the yen near a 7-month high as the dollar weakens amid growing fears of a US recession. Downbeat US data last week raised concerns that the economy might be slowing down faster than expected, resulting in a surge in Fed rate cut expectations. -Are you looking for automated trading? Check our detailed guide- Data on Friday showed the US economy added 114,000 jobs, below estimates of 175,000. Meanwhile, the unemployment rate jumped from 4.1% to 4.3%. These figures followed more downbeat data on the manufacturing sector. Fears of a recession in the US had investors rushing to other safe-haven assets like the yen. Initially, traders were expecting a 25-bps cut in September. However, after the jobs report, the likelihood of a 50-bps cut has risen to 80%. At the same time, markets are betting on 155-bps cuts this year. This surge in rate cut expectations led to a decline in US Treasury yields, boosting the yen. Yields started falling after the Fed policy meeting, where Powell opened the door to a September rate cut. At the same time, investors were seeking safety amid global economic uncertainty. Notably, many major economies are buckling under high interest rates. Meanwhile, others like China are struggling to recover, pushing central banks to lower borrowing costs. Elsewhere, Middle East tensions continued with threats of retaliation after the killing of a Hamas leader in Iran. As a result, the US is ready to send its military to try and control the situation. Fears of an escalation have dampened risk appetite in most markets, benefitting safer assets like the yen. USD/JPY key events today US ISM Services PMI USD/JPY technical forecast: Plumet below significant support levels On the technical side, the USD/JPY price is sharply declining, breaking below significant support levels. Bears have pushed the price far below the 30-SMA, showing a solid swing. At the same time, the RSI trades in the oversold region, indicating extreme bearish momentum. -If you are interested in forex day trading then have a read of our guide to getting started- The price recently fell past the 145.05 key psychological level. Bears are now eyeing the next hurdle at the 140.00 level. However, given the price is oversold, bulls might resurface for a pause or pullback before the downtrend continues. https://www.forexcrunch.com/blog/2024/08/05/usd-jpy-forecast-hits-7-month-low-amid-us-recession-fears/
