2024-07-28 07:48

Investors are fully expecting two rate cuts from the BoE by December. Data on US and UK business activity showed further expansion in June. Investors will pay close attention to monetary policy meetings in the US and the UK. The GBP/USD weekly forecast is trending south as markets shift towards a more dovish outlook for the Bank of England. Ups and downs of GBP/USD The GBP/USD price fell last week as Bank of England rate cut expectations increased. At the same time, the dollar firmed as data showed economic resilience and easing inflation. Investors are fully expecting two rate cuts from the BoE by December. However, the timing remains unclear. Rate cut bets went up as bets for a September Fed cut rose. Meanwhile, data on business activity from the US and the UK showed further expansion in June. Therefore, both economies are doing well despite high rates. Additional US data revealed bigger-than-expected economic growth in Q2 and a drop in unemployment claims. The week ended with inflation figures coming in as expected at 0.2%. Next week’s key events for GBP/USD Next week, investors will pay close attention to monetary policy meetings in the US and the UK. The Fed will meet on Wednesday and likely keep interest rates unchanged at 5.50%. Meanwhile, the Bank of England will meet on Thursday, and there is a 50% chance policymakers will vote to lower borrowing costs. Additionally, markets will focus on the all-important US monthly employment report. The last report showed slower job growth and an increase in the unemployment rate. If this trend continues, policymakers might assume a more dovish tone. At the same time, the dollar would fall, allowing GBP/USD to rally. GBP/USD weekly technical forecast: Bears challenge bullish trend at the 22-SMA On the technical side, the GBP/USD price has fallen back to the 22-SMA after reaching new highs. However, the bullish bias remains intact, with the price above the SMA and the RSI slightly above 50. The bullish trend continued when the price broke above the 1.2800 key resistance level. Bears prompted a pullback before the price reached the 1.3050 key level. If the bullish trend remains in play, the price will bounce off the 22-SMA to revisit the 1.3050 resistance. However, if bears take over, it might break below the SMA and the 1.2800 support. https://www.forexcrunch.com/blog/2024/07/28/gbp-usd-weekly-forecast-expecting-a-dovish-boe-path-ahead/

2024-07-27 08:48

Investors increased bets on a BoJ rate hike next week. US GDP figures for Q2 came at 2.8%, well above the 2.0% forecast. Investors await the Bank of Japan and Fed policy meetings. The USD/JPY weekly forecast is bearish, with investors increasingly betting on a Bank of Japan rate hike at next week’s meeting. Ups and downs of USD/JPY The USD/JPY pair had a bearish week, where the yen found its feet against the dollar. The rally in the yen came as investors increased bets on a BoJ rate hike at next week’s policy meeting. The rate hike optimism kept the dollar at bay despite better-than-expected economic data. Notably, US business activity increased in June as the services sector expanded. Meanwhile, GDP figures for Q2 came in at 2.8%, well above the 2.0% forecast. Additionally, unemployment claims in the US fell last week, indicating a still robust labor market. Finally, the core PCE index came in line with expectations, rising by 0.2% m/m. Next week’s key events for USD/JPY Next week, USD/JPY will experience a lot of volatility with the Bank of Japan and Fed policy meetings. At the same time, the US will release key manufacturing and employment data. Notably, there is a 67.2% chance that the BoJ will hike rates by 10bps next week. If this happens, the yen might strengthen, pushing USD/JPY lower. Meanwhile, the Fed will likely keep rates unchanged. However, given the recent decline in inflation, policymakers might take a more dovish stance. Elsewhere, the US nonfarm employment report will continue shaping the outlook for Fed rate cuts. Easing in the labor market will give policymakers more confidence to cut in September. USD/JPY weekly technical forecast: Signaling a strong downtrend On the technical side, the USD/JPY price has broken below its bullish trendline and is approaching the 152.01 support level. Moreover, the RSI has crossed below 50, indicating a bearish sentiment shift. The price was in an uptrend with higher highs and lows for a long time. However, this changed when the price broke below the previous low to make a lower low. There is a high chance it will also make a lower high next week. A downtrend would allow bears to retest the 152.01 and 146.50 support levels. https://www.forexcrunch.com/blog/2024/07/27/usd-jpy-weekly-forecast-bearish-amid-boj-rate-hike-odds/

2024-07-26 09:59

Markets are fully pricing in two BoE rate cuts by December. Data on Thursday revealed a bigger-than-expected expansion in the US economy. All eyes are on the US core PCE report. The GBP/USD price analysis highlights a bearish trend despite a slight recovery ahead of the US inflation data. The pound fell as investors increased expectations for Bank of England rate cuts in the previous session. At the same time, the dollar was steady amid signs the US economy remains resilient. This week, the Bank of England and the Fed have raised their rate cut expectations. The US central bank’s policy outlook significantly impacts other major central banks. Most of them remained cautious for a long time since US inflation remained high. Moreover, diverging from the Fed’s policy would mean a weaker currency. Therefore, policymakers prefer to let the Fed lead the way. Although rates have started coming down in Canada and the Eurozone, there was caution due to the Fed’s more hawkish tone. However, recent US inflation figures have boosted expectations for a cut in September. As a result, investors are more confident that BoE policymakers will cut rates this year. Notably, markets are fully pricing in two BoE rate cuts by December. Meanwhile, there is a 50% likelihood of a cut next week. Elsewhere, the dollar got a boost after Thursday’s data revealed a bigger-than-expected expansion in the US economy. The GDP grew by 2.8% in the second quarter, well above estimates for a 2.0% expansion. However, the report also revealed softer inflation, keeping bets for a September Fed cut intact. All eyes are now on the core PCE report, which might show an increase from 0.1% to 0.2%. GBP/USD key events today US core PCE price index m/m GBP/USD technical price analysis: Price hovers near 30-SMA in a shallow bearish trend On the technical side, the GBP/USD price is in a shallow bearish trend close to the 30-SMA. Meanwhile, the RSI trades in bearish territory but is not reaching the oversold region. This is a sign that bears are holding back or bulls are preventing strong bearish swings. This slow trend might continue to the 1.2800 support level. However, bulls might take over with a break above the 30-SMA if bears do not gain momentum. Consequently, the price would get a chance to revisit the 1.3050 key level. https://www.forexcrunch.com/blog/2024/07/26/gbp-usd-price-analysis-weak-upside-ahead-of-us-inflation/

2024-07-26 09:18

The yen has gained 2.4% this week. The BoJ’s odds of a rate hike are above 67%. The BoJ might announce plans to reduce bond purchases. The USD/JPY outlook is slightly bullish, with the yen retreating from a 2-month high. This shift comes as the dollar strengthens on the back of upbeat GDP data, indicating a robust economic landscape. At the same time, investors look forward to next week’s Bank of Japan policy meeting. The yen has gained 2.4% this week amid an increase in BoJ rate hike expectations. When the week began, investors were pricing a 40% chance of a 10bps cut next week. However, the likelihood has risen to 67.2% as the week winds down. Notably, there is more pressure on Japan’s central bank to hike rates as a weak yen hurts the economy. Furthermore, the BoJ might announce plans to reduce bond purchases. A rate hike and reduced economic stimulus could lead to a rally in the yen. Investors are also optimistic that the Fed will start cutting rates soon, reducing the rate gap between Japan and the US. Meanwhile, after upbeat US data, the US dollar extended gains made on Thursday. Notably, the US economy expanded by 2.8% in the second quarter, beating forecasts of 2.0%. The report had little impact on expectations for a September Fed cut as inflation eased despite resilient demand. Moreover, US jobless claims fell to 235,000 last week, missing forecasts for 238,000, indicating a still-tight labor market. These reports could keep policymakers cautious at next week’s policy meeting. Investors are eagerly awaiting the core PCE price index that will give more clues on what the Fed might do in September. USD/JPY key events today US core PCE Price Index m/m USD/JPY technical outlook: Price climbs after Morning Star candlestick pattern On the technical side, the USD/JPY price is bouncing higher after finding support at the 152.01 key level. However, the bearish trend remains intact since the price is below the 30-SMA. At the same time, the RSI is in bearish territory. Still, there are signs bulls might be ready to take charge. Notably, the price has formed a Morning Star candlestick pattern, indicating a possible bullish reversal. The price must break above the 30-SMA and 156.02 resistance to confirm this bullish signal. https://www.forexcrunch.com/blog/2024/07/26/usd-jpy-outlook-yen-retreats-from-2-month-top-after-us-gdp/

2024-07-25 10:24

The Bank of Canada lowered borrowing costs by 25 basis points to 4.5%. Canadian factory sales fell by 2.6% in June. The US composite PMI index rose to 55.0, indicating robust business activity. The USD/CAD outlook shows strong bullish sentiment as the Canadian dollar wallows near a 3-month low after a second Bank of Canada rate cut. Moreover, the central bank signaled further easing if inflation continues cooling. On Wednesday, the Bank of Canada lowered borrowing costs by 25 basis points to 4.5%. This was the second rate cut after it became the first major central bank to cut in June. The last inflation figures were softer than expected, weakening the economy. Therefore, Canada’s central bank had every reason to cut rates. If this trend continues, there will be another rate cut soon. Notably, there is a 50% chance the BoC will lower borrowing costs in September. Elsewhere, data revealed that Canadian factory sales fell by 2.6% in June. This is another sign of weak demand that will encourage policymakers to continue the rate-cutting cycle. Meanwhile, in the US, investors still expect the first rate cut in September. However, economic reports continue showing resilience that might keep policymakers cautious. Data on Wednesday showed the US composite PMI index rose to 55.0, indicating robust business activity. This followed another upbeat report last week, which showed better-than-expected sales. The next economic indicator is the GDP estimate for the second quarter. Economists expect a bigger expansion in Q2 than in Q1, further highlighting economic resilience. After that, the core PCE report will show the state of inflation on Friday. USD/CAD key events today US advance GDP q/q US unemployment claims USD/CAD technical outlook: Bulls charge ahead with the 1.3850 level in sight On the technical side, the USD/CAD price has continued its rally, breaking past the 1.3800 resistance level. Bulls are now eyeing the 1.3850 key level. However, the price has gone far above the 30-SMA without pulling back. At the same time, the RSI trades in the overbought region, an extreme for bullish momentum. Therefore, USD/CAD might soon pause or pull back to retest the 30-SMA before continuing the uptrend. However, if bulls are still strong, they will break past the 1.3850 level without pausing. https://www.forexcrunch.com/blog/2024/07/25/usd-cad-outlook-posts-3-month-top-following-2nd-boc-rate-cut/

2024-07-25 09:02

Data on Wednesday showed a decline in Eurozone business activity in July. The composite PMI rose to 55.0, indicating an increase in business activity. Forecasts show that the economy expanded by 2.0% in Q2. The EUR/USD forecast is pessimistic as the euro remains fragile following disappointing PMI data from the Eurozone. In contrast, business activity in the US improved. Data on Wednesday showed a decline in Eurozone business activity in July. The composite PMI fell from 50.9 in June to 50.1. According to experts, the decline indicates that the recovery in the Eurozone economy has stalled. Furthermore, the manufacturing sector performed poorly, especially in Germany. In the bloc, the manufacturing PMI hit a 7-month low of 45.6 in July. Moreover, economists predict the economy will grow an average of 0.7% in 2024 and 1.4% in 2025. Ideally, a weak economy would increase European Central Bank rate cut bets. However, the outlook remains unclear because policymakers have said inflation remains high. Still, economists expect another ECB cut in September. Meanwhile, the composite PMI rose to 55.0 in the US, indicating increased business activity. Although markets are fully pricing a cut in September, economists have warned policymakers might maintain caution. Notably, the US economy remains resilient, meaning demand remains high. Therefore, if the Fed cuts too early, inflation might spike. Investors will watch the first Q2 GDP estimate later for more clues on the Fed’s rate cut outlook. Forecasts show that the US economy expanded by 2.0%. This would be an improvement from the first quarter growth of 1.4%. EUR/USD key events today US advance GDP q/q US unemployment claims EUR/USD technical forecast: Bulls resurface in the downtrend to retest the 30-SMA On the technical side, the EUR/USD price is in a new bearish trend after breaking below the 30-SMA. At the same time, the RSI has broken below 50 to support bearish momentum. Notably, bears took over when the price neared the 1.0950 resistance level. However, the decline was initially weak, with the price making small-bodied candles. Additionally, it was sticking close to the SMA. Now, the price has found its footing below the SMA, but it is pulling back. It might retest the SMA before continuing to the 1.0800 support level. The downtrend will continue if the price stays below the SMA and the RSI below 50. https://www.forexcrunch.com/blog/2024/07/25/eur-usd-forecast-bears-intensify-after-downbeat-eu-pmi/