2024-08-02 10:04

The yen rally extended into August as investors raised bets on Fed rate cuts. Business activity in the US manufacturing sector fell to an eight-month low. Markets were pricing in a 27.5% chance of a 50bps Fed cut in September. The USD/JPY price analysis still points South as the yen strengthens due to increased safe-haven demand. Investors fear a faster-than-expected US economic downturn but remain cautious ahead of the US nonfarm payroll report. The yen has just ended a bullish month and is extending these gains into August. Notably, July ended with a 10bps rate hike from the Bank of Japan. At the same time, the central bank announced plans to reduce its bond purchases, indicating confidence in Japan’s economic recovery. The yen rally extended into August as investors raised bets on Fed rate cuts. Notably, the US central bank has signaled the start of rate cuts in September. However, it is conditional that inflation continues to decline. Still, it is a big step towards lower borrowing costs. The most recent boost to Fed rate cut expectations came after downbeat economic data. Business activity in the US manufacturing sector fell to an eight-month low, and the ISM PMI dropped from 48.5 in June to 46.8 in July. Consequently, fears of a slowdown in the economy increased. Initially, investors were confident that the Fed would achieve a soft landing, where inflation would fall without excessively hurting the economy. However, that might not be the case. Moreover, US unemployment claims reached an 11-month high of 249,000. By the end of the day, markets were pricing in a higher 27.5% chance of a 50bps Fed cut in September. Furthermore, this outlook could strengthen with the upcoming nonfarm payrolls. Economists expect slower job growth in July. USD/JPY key events today US average hourly earnings US nonfarm payrolls US unemployment rate USD/JPY technical price analysis: Bears eye the 148.04 level in new swing On the technical side, the USD/JPY price has made new lows after breaking below the 152.01 support level. The price trades in a developed downtrend, making consistent lower highs and lows. At the same time, it has respected the 30-SMA as resistance, showing bears are in the lead. The new swing is approaching the 148.04 critical level. Here, it might pause as bears rest before pulling back or falling. The downtrend will continue as long as the price stays below the SMA. https://www.forexcrunch.com/blog/2024/08/02/usd-jpy-price-analysis-yen-soars-after-boj-economic-turmoil/

2024-08-02 08:33

The Bank of England started its rate-cutting cycle on Thursday with a quarter-point cut. The US ISM manufacturing PMI fell to an 8-month low of 46.8 in July. US unemployment claims rose, indicating a weaker labor market. The GBP/USD outlook indicates strong bearish sentiment, with the pound extending its decline following the Bank of England’s rate cut on Thursday. Meanwhile, the dollar fell after data revealed a faster-than-expected slowdown in the US economy. At the same time, markets raised expectations for Fed rate cuts. The Bank of England started its rate-cutting cycle on Thursday with a quarter-point cut. Although a cut was likely, the market had yet to fully price it in. Therefore, the pound plunged after the meeting. The BoE has joined the ECB and BoC in lowering borrowing costs ahead of the Fed. However, the US central bank is also edging closer to rate cuts. Notably, at the policy meeting on Wednesday, Powell said the Fed will cut by September if inflation comes in line with expectations. However, this outlook remains data-dependent. The dollar was initially stronger on Thursday amid safe-haven demand. Notably, tensions in the Middle East rose after the assassination of a Hamas leader. This incident spooked investors, who dumped risky assets and bought the dollar. However, the move later reversed after US data pointed to a rapid economic decline. Notably, the ISM manufacturing PMI fell to an 8-month low of 46.8 in July. Figures below 50 indicate a contraction in the sector. Elsewhere, US unemployment claims rose, suggesting a weaker labor market. These reports led to an increase in Fed rate cut expectations. Investors expect the Fed to cut rates three times before the year ends. GBP/USD key events today US average hourly earnings m/m US nonfarm employment change US unemployment rate GBP/USD technical outlook: Bearish bias strengthens with new swing low On the technical side, the GBP/USD price has extended its decline below the 30-SMA. Meanwhile, the RSI is almost entering the oversold region, strengthening the bearish bias. However, the price has reached strong support at the 1.2700 level. If bears remain strong, GBP/USD will soon break below 1.2700 to retest the 1.2620 support level. However, if the 1.2700 support holds firm, the price might bounce to retest the 30-SMA before the downtrend continues. https://www.forexcrunch.com/blog/2024/08/02/gbp-usd-outlook-pound-plummets-as-boe-lowers-rates/

2024-08-01 10:25

Iran assassinated a Hamas leader, escalating tensions in the Middle East. The Fed opened the door for a September rate cut. Data revealed a bigger-than-expected expansion in Canada’s economy. The USD/CAD outlook turned bullish on Thursday as the US dollar gained amid increased Middle East tensions. However, investors were still digesting upbeat GDP data from Canada and the slightly dovish Fed meeting. On Thursday, there was a scramble for safety as it became clear that tensions in the Middle East were escalating. A report in the previous session revealed that Iran assassinated a Hamas leader. This development could derail recent talks for a ceasefire between Israel and Hamas. Moreover, retaliations will likely lead to an escalation in the war. As a result, investors rushed to safe-haven assets like the dollar. Meanwhile, in the previous session, the dollar fell after the Fed opened the door for a September rate cut. However, Fed Chair Powell noted that any decision will be based on incoming data. Meanwhile, US data showed that private employment rose by 122,000, missing forecasts for 150,000. A weaker labor market will increase the urgency for a rate cut in the US. However, investors are awaiting the more significant nonfarm payrolls report on Friday. In Canada, data revealed a bigger-than-expected expansion in the economy, boosting the Canadian dollar. The GDP grew by 0.2% in May, beating estimates for a 0.1% growth. Although the economy is still struggling, this improvement might relieve pressure on the BoC to cut rates. The loonie also rose with oil prices due to Middle East tensions. USD/CAD key events today US unemployment claims ISM manufacturing PMI USD/CAD technical outlook: Bulls challenge bears for control at the 30-SMA On the technical side, the USD/CAD price has risen to retest the 30-SMA after the recent shift in sentiment. The previous bullish trend paused near the 1.3850 level. Here, the RSI made a bearish divergence that signaled a looming bearish reversal. After this signal, bears took over with a break below the 30-SMA. However, they found solid support at the 1.3800 support, where bulls resurfaced. If the SMA holds firm as resistance, the price might break below 1.3800 to make a lower low. On the other hand, the previous bullish trend will continue if the price breaks above the SMA. https://www.forexcrunch.com/blog/2024/08/01/usd-cad-outlook-surges-amid-escalating-middle-east-tensions/

2024-08-01 08:53

The dollar rose as geopolitical tensions escalated in the Middle East. The Fed held rates but opened the door to a rate cut in September. Eurozone inflation unexpectedly rose in July. The EUR/USD forecast shows a freefalling pair as the dollar gains amid safe-haven demand. However, the outlook for the dollar is bearish after the Fed signaled a possible rate cut in September. Meanwhile, ECB rate cut bets remained intact despite a spike in inflation. The dollar rose on Thursday as geopolitical tensions escalated in the Middle East. Tensions increased after a Hamas leader was killed in Iran. This killing diminished hopes for a successful ceasefire agreement that would reduce tensions between Israel and Hamas. Meanwhile, the dollar fell on Wednesday after a slightly dovish Fed policy meeting. The US central bank held rates but opened the door to a rate cut in September. Powell said that if inflation continued easing in line with expectations, the Fed might be ready to lower borrowing costs in September. However, he also cautioned that policymakers will keep watching incoming data before the next meeting. Investors are fully pricing in the first cut in September. Moreover, they increased the size of cuts expected this year to 72bps. Further downward pressure for the dollar came from the ADP jobs report. Notably, private employers hired a smaller-than-expected 122,000 more people. Economists had forecasted 150,000 additional private jobs. Meanwhile, Eurozone inflation unexpectedly rose in July. The CPI increased by 2.6% after a 2.5% increase in June. Nevertheless, there was little impact on expectations for a September ECB cut. Notably, service inflation eased from 4.1% to 4.0%, a slight relief for policymakers. EUR/USD key events today US unemployment claims US ISM manufacturing PMI EUR/USD technical forecast: Bearish momentum spikes after 30-SMA resistance On the technical side, the EUR/USD price has suddenly fallen sharply after retesting the 30-SMA resistance. Consequently, the price has dropped well below the SMA, indicating solid bearish momentum. Similarly, the RSI is quickly approaching the oversold region. Previously, the downtrend was slow and shallow, keeping close to the SMA. Moreover, the RSI made a bullish divergence, indicating weaker bearish momentum. However, the recent surge in momentum could push the price to the 1.0750 key level. At the same time, the RSI might dip into the oversold region. https://www.forexcrunch.com/blog/2024/08/01/eur-usd-forecast-bears-takeover-amid-risk-off-sentiment/

2024-07-31 11:13

The yen is heading for a monthly gain of 5%. The Bank of Japan raised rates by 25bps. Investors are cautious ahead of the Fed policy meeting. The USD/JPY forecast shows increased bearish sentiment as the yen surged after the Bank of Japan raised interest rates. At the same time, Japan’s central bank announced plans to reduce its massive economic stimulus. Meanwhile, investors were preparing for the Fed policy meeting. The yen is heading for a monthly gain of 5%. The recent rally came after the BoJ hiked rates on Wednesday, tightening its monetary policy. Japan’s rates are now at 0.25%, meaning the policy divergence between the BoJ and the Fed is shrinking. The yen’s rally in July was caused by several factors. First, the Bank of Japan intervened in the markets by buying the yen and selling the dollar, resulting in a brief increase in demand for the yen. Second, there was more speculation about a possible rate hike at the end of the month. Consequently, investors started pricing in higher rates even before the policy meeting. As it turns out, the BoJ did not disappoint. Third, markets hoped the BoJ would announce plans to reduce its bond purchases. However, the actual figures came in lower than expected. The central bank expects to halve its bond purchases by the first quarter of 2026. Elsewhere, there was caution ahead of the Fed policy meeting. The US central bank will likely keep interest rates unchanged. However, traders hope policymakers will signal the first rate cut in September. USD/JPY key events today BOJ Press Conference US ADP non-farm employment change US Employment Cost Index q/q US pending home sales m/m FOMC policy meeting USD/JPY technical forecast: Bears take charge after bearish engulfing candle On the technical side, the USD/JPY price has suddenly shifted from bullish to bearish. Initially, bulls took charge by breaking above the 30-SMA. However, they failed to breach the 154.80 key level. Here, the price made a bearish engulfing candle, indicating a looming reversal. The price fell back below the 30-SMA, and the RSI entered the oversold region. After the reversal pattern, bears took over and broke below the 152.01 support level. As a result, the price has made a lower low. If this bearish trend continues, the price will soon take out the 150.02 level. https://www.forexcrunch.com/blog/2024/07/31/usd-jpy-forecast-boj-rate-hike-boosts-yen-to-new-highs/

2024-07-31 11:07

Inflation in Australia eased from 4.0% to 3.8% as expected. Investors expect the first RBA cut in November. The dollar fluctuated as investors held their breath ahead of the Fed policy meeting. The AUD/USD price analysis is bearish. The Aussie trades near a three-month low after cooler-than-expected inflation data. Meanwhile, investors are on the edge ahead of the FOMC policy meeting. Data on Wednesday showed that inflation in Australia eased from 4.0% to 3.8% as expected. Meanwhile, the trimmed mean for the second quarter cooled more than expected, from 1.0% to 0.8%. These figures led to a pivot in the Reserve Bank of Australia’s monetary policy outlook. At next week’s meeting, investors were initially weighing the possibility of a 25bps rate hike. However, the risk of a hike fell significantly after the CPI report. At the same time, markets moved from expecting the first rate cut next year to November. For a long time, rate-cut bets have shown that the RBA will be among the last major central banks to cut rates. However, if inflation in Australia is dropping faster than expected, this might change. Moreover, the Aussie might fall further if policymakers take a more dovish stance next week. Meanwhile, the dollar fluctuated as investors held their breath before the Fed policy meeting. Today’s primary focus will be messaging. Traders will wait to see whether policymakers are confident enough to call for a rate cut in September. Before the last inflation report, there was little confidence that price pressures would continue to the 2% target. Consequently, the Fed only projected one rate cut this year. However, since inflation has progressed lower, there is a high chance of a more dovish projection. AUD/USD key events today US ADP non-farm employment change US employment cost index q/q US pending home sales m/m FOMC policy meeting AUD/USD technical price analysis: RSI signals weaker bearish momentum On the technical side, the AUD/USD price has made a lower low, indicating a downtrend. At the same time, the price sits far below the 30-SMA with the RSI oversold, supporting the bearish bias. The decline reached the 0.6500 pivotal support level, which could become a strong barrier. Notably, the RSI has made a bullish divergence, indicating weaker bearish momentum. If bears have weakened, bulls might resurface to retest the 30-SMA. However, the trend will only shift with a break above the SMA. https://www.forexcrunch.com/blog/2024/07/31/aud-usd-price-analysis-cooler-inflation-drags-to-3-month-low/