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/

2024-07-30 10:28

There is a 60% chance the BoE will cut rates on Thursday. UK service inflation has remained stubbornly high. Investors are hoping for a signal that the Fed will start cutting rates in September. The GBP/USD price analysis is leaning slightly bullish as the pound shows signs of recovery ahead of the Fed and Bank of England policy meetings. The Fed will probably hold current rates, while the BoE is more likely to cut them. The pound recovered on Tuesday after plunging in the previous session due to an increase in BoE rate cut bets. By Friday, markets were pricing at a 50% chance that the BoE would cut in August. However, this figure rose to 60% on Monday, weighing on the pound. Traders depend on speculation and the outlook for Fed policy. Due to the July 4th election, policymakers in the UK have remained silent for nearly two months. As a result, there has been little guidance on where rates might be in August. Inflation in the country has reached the 2% target. However, service inflation has remained stubbornly high, keeping policymakers cautious. Still, with inflation in the US easing, there is hope for a dovish Fed tilt that will allow other major central banks to follow suit. Meanwhile, the Fed policy meeting will significantly impact September rate cut expectations. In recent speeches, Powell has acknowledged progress on inflation. He said confidence is growing that inflation will fall to the 2% target. Additionally, Powell has noted the recent softer labor market figures, which could increase the urgency of lowering interest rates. Therefore, market participants are hoping for a signal that the Fed will start cutting rates in September. GBP/USD key events today US CB Consumer Confidence US JOLTS Job Openings GBP/USD technical price analysis: Weak bearish momentum signals a corrective move On the technical side, the GBP/USD price is trading in a tight, bearish channel with clear support and resistance lines. The decline started when the price failed to sustain a move above the 1.3001 resistance level. However, bears have been unable to make significant swings below the 30-SMA, indicating weak momentum. This weak momentum can also be seen in the RSI, which has failed to reach the oversold region. Therefore, this might be a corrective move. Bulls might take control with a break above the 30-SMA. Otherwise, the slow downtrend will continue below the 1.2800 support level. https://www.forexcrunch.com/blog/2024/07/30/gbp-usd-price-analysis-sterling-gains-ahead-of-boe-meeting/

2024-07-30 08:48

Last week, the yen gained over 2% against the US dollar. The BoJ might hike rates by 10bps. The Fed will likely keep rates unchanged. The USD/JPY outlook shows a mild bullish move as the pair recovers ahead of monetary policy meetings in Japan and the US. Investors are eyeing a potential rate hike from the Bank of Japan on Wednesday. Meanwhile, expectations suggest the Fed will maintain its current rates. Last week, the yen gained over 2% against the US dollar amid increased expectations for a BoJ rate hike. Investors have gained confidence in a hike because of increased pressure to support the weak yen. As a result, there is a 63% chance that Japan’s central bank will announce a 10bps rate hike tomorrow. However, experts have warned that there is a risk the central bank might disappoint. The BoJ has surprised markets many times before. If there is no rate hike tomorrow, it might be a dark day for the yen. Meanwhile, traders also anticipate the BoJ’s announcement of plans to reduce its bond purchases. Such an outcome would show confidence that Japan’s economy is on steadier ground, which could propel the yen higher. On the Fed’s side, investors will focus on economic projections and Powell’s message. At the last meeting, the Fed projected one rate cut in December, which led to a decline in September’s rate cut expectations. If policymakers maintain this outlook, rate-cut bets will fall again, boosting the dollar. However, market participants expect a more dovish outlook given the recent cooler inflation. Notably, policymakers could signal the first cut in September. USD/JPY key events today US CB consumer confidence US JOLTS Job Openings USD/JPY technical outlook: Morning Star pattern ignites buyers On the technical side, the USD/JPY price has broken above the 30-SMA, indicating a shift in control from bears to bulls. The RSI also shows a shift in sentiment, having broken above 50. This new move comes after the downtrend paused at the 152.01 support level. At this point, the price made a Morning Star candlestick pattern, signaling a looming bullish reversal. Since then, bulls have taken charge and broken above the 30-SMA. However, they face a solid barrier at the 154.80 key level. A break above would clear the path to the next resistance at 158.02. https://www.forexcrunch.com/blog/2024/07/30/usd-jpy-outlook-recovering-as-investors-eye-boj-fed/

2024-07-29 10:49

Major events this week include the Fed policy meeting and NFP. The likelihood of a Fed cut this week is below 5%. ECB’s Schnabel said Eurozone service price growth remains a significant problem. The EUR/USD outlook points south, with the dollar firming ahead of Wednesday’s Federal Reserve policy meeting. Meanwhile, ECB policymakers have created a mixed picture of the outlook for European Central Bank rate cuts. Markets are preparing for several major events this week, including the Fed policy meeting and US nonfarm payrolls. Meanwhile, the Eurozone will release key inflation data shaping the outlook for ECB rate cuts. On Friday, data revealed that US inflation increased slightly, aligning with expectations. As a result, markets are still expecting the first cut in September. Meanwhile, the likelihood of a cut this week is below 5%. At the Fed policy meeting, officials might highlight the progress in inflation towards the 2% target. However, there might be caution regarding the US economy’s resilience. The continued strength gives the Fed more room to wait for inflation to drop. Still, investors are confident policymakers will call for a rate cut in September. Meanwhile, inflation is at 2.5% in the Eurozone, nearing the ECB’s 2% target. However, the central bank held rates in July due to high service inflation. On Friday, ECB’s Isabel Schnabel noted that the central bank has a challenging task ahead to lower inflation. According to her, service price growth remains a significant problem. However, other policymakers are ready to cut in September. Meanwhile, ECB President Christine Lagarde said that September remains wide open, meaning anything could happen, depending on incoming data. EUR/USD key events today Neither the US nor the Eurozone will report high-impact economic data today. Therefore, the pair might consolidate. EUR/USD technical outlook: Solid support at 1.0825 On the technical side, the EUR/USD decline has paused at the 1.0825 support level. Recently, the price was in a corrective move that retested the 30-SMA resistance. Since the SMA held firm, the price bounced lower with an impulsive candle. However, bears must break below 1.0825 to make a lower low and confirm a downtrend. Notably, the RSI is showing weaker bearish momentum near 1.0825. If bears fail to break below, the trend might reverse, with the price breaking above the SMA. However, if bearish momentum increases, the downtrend will continue with the target of 1.0750. https://www.forexcrunch.com/blog/2024/07/29/eur-usd-outlook-dollar-soars-in-wake-of-fomc-meeting/

2024-07-29 08:54

The Bank of Canada implemented its second rate cut on Wednesday. Investors are pricing in a 70% chance that the BoC will cut rates in September. US inflation increased modestly, which is in line with forecasts. The USD/CAD forecast shows a solid uptrend as the Canadian dollar extends declines, driven by increased expectations for BoC rate cuts. Additionally, the loonie remains weak due to falling oil prices. The Canadian dollar had a bearish week after the Bank of Canada implemented its second rate cut on Wednesday. Moreover, the central bank indicated that there would be more cuts if inflation continued easing. Analysts believe Canada’s central bank is now focused on spurring growth. Notably, high rates have hurt demand in Canada’s economy. As a result, there is a lot of pressure to lower borrowing costs and support the economy. Consequently, investors are pricing a 70% chance that the BoC will cut rates in September. At the same time, oil prices fell last week, hurting Canada’s commodity currency. Due to China’s weak economy, demand concerns were the primary catalyst for this move. Furthermore, Israel and Hamas made steps towards a ceasefire that would reduce the risk of escalation in the war. Meanwhile, data on Friday showed US inflation increasing modestly, which aligns with forecasts. As a result, there was little impact on Fed rate cut expectations. Markets still expect the first rate cut in September. However, when policymakers meet this week, they might call for caution since the economy remains robust. Still, they might signal a more dovish outlook since inflation is progressing to the 2% target. USD/CAD key events today Investors do not expect high-impact economic reports from the US or Canada today. Therefore, the pair might extend last week’s rally. USD/CAD technical forecast: Double top and bearish divergence On the technical side, the USD/CAD price has slowed down near the 1.3850 key level. However, the bullish bias remains intact, with the price above the 30-SMA and the RSI above 50. The uptrend has continued for a long time without pullbacks to retest the SMA. Therefore, bulls must be exhausted. As a result, bears have started making strong candles below the 1.3850 level. At the same time, the price has made a double top with a bearish RSI divergence, indicating fading momentum that could lead to a bearish reversal. However, the bullish trend will continue if the price breaks above 1.3850. https://www.forexcrunch.com/blog/2024/07/29/usd-cad-forecast-bullish-momentum-continues-on-dovish-boc/