2024-07-21 10:04

Powell indicated that policymakers were more confident about lowering inflation. The US reported better-than-expected sales for June. The ECB held rates but failed to give clear guidance on the future. The EUR/USD weekly forecast is bullish as Fed policymakers gain confidence inflation will reach the target, weakening the dollar. Ups and downs of EUR/USD The EUR/USD pair had a bearish week. However, during the week, prices reached new highs as the dollar fell. Notably, the dollar was weak at the start of the week, as Powell indicated that policymakers were more confident about lowering inflation. As a result, investors got more confident that the Fed would cut rates in September. This pushed the dollar down, allowing the euro to rally. Furthermore, although the US reported better-than-expected sales for June, the dollar continued falling. However, the trend shifted towards the end of the week as the euro plunged after the ECB policy meeting. The central bank held rates but failed to give clear guidance on the future, saying it would depend on data. This created uncertainty about the rate cut outlook, weighing on the euro. Next week’s key events for EUR/USD Next week, investors will focus on data from the US, including the gross domestic product and durable goods. These reports will continue shaping the outlook for Fed rate cuts. Notably, markets are fully pricing in a rate cut in September. The last GDP report showed an expansion of 1.4%, slightly better than estimates. However, it was well below previous readings, indicating weaker economic activity. Further economic deterioration will put pressure on the Fed to lower borrowing costs. The durable goods orders will also show the state of demand that will influence the outlook for rate cuts. EUR/USD weekly technical forecast: Price retraces after hitting channel resistance On the technical side, the EUR/USD price is pulling back after reaching its channel resistance. Moreover, it has confirmed the shallow bullish trend by making a higher high. Currently, the price sits above the 22-SMA, showing bulls are in the lead. At the same time, the RSI sits above 50, showing solid bullish momentum. However, since the price trades in a shallow trend, bears are nearly as strong as bulls. Therefore, the price might continue falling next week, past the 22-SMA support to retest the channel support level. The bullish bias will remain if the price continues making higher highs and lows. https://www.forexcrunch.com/blog/2024/07/21/eur-usd-weekly-forecast-fed-confident-in-taming-inflation/

2024-07-20 19:19

Data on Tuesday showed upbeat US retail sales, indicating resilience. Canada’s inflation eased more than expected, boosting bets for a July rate cut. The Bank of Canada will likely cut rates next week. The USD/CAD weekly forecast paints a strong bullish picture as the Canadian dollar plummets amid poor data and a looming BoC rate cut. Ups and downs of USD/CAD The USD/CAD pair had a bullish week as the US dollar soared against a weak Canadian dollar. Although the dollar was weak in the broader market, the loonie was weaker. Data on Tuesday showed upbeat US retail sales, indicating resilience. Meanwhile, inflation eased more than expected in Canada, boosting bets for a July rate cut. To make matters worse, Canada reported dismal sales on Friday, well below expectations. This clearly showed that the economy is falling apart due to high rates. Consequently, the Bank of Canada has every reason to lower borrowing costs. Next week’s key events for USD/CAD Investors will focus on the Bank of Canada policy meeting next week. Meanwhile, reports on GDP and durable goods in the US will be released. The Bank of Canada will likely cut rates next week after inflation eased further in June. The chances of a cut in July rose sharply after data this week showed that inflation in Canada increased by a smaller-than-expected 2.7%. This came after a jump of 2.9% in May. At the same time, economists expect the central bank to cut twice more in 2024. Meanwhile, US GDP data will show the state of the economy. However, unless a big surprise exists, it might not change the outlook for a cut in September. USD/CAD weekly technical forecast: Bulls charge for range resistance level On the technical side, the USD/CAD price trades above the 22-SMA, with the RSI rising above 50, showing that bulls are in control. However, the price has been trading sideways, chopping through the SMA. Therefore, bears and bulls are equally matched, and the market has no clear direction. Notably, the price has stayed in a range between the 1.3600 support and the 1.3750 resistance. Therefore, the price must break out of this area to start trending. Since bulls are in charge, the price might challenge the range resistance. A break above would allow the price to revisit the 1.3900 key level. However, if the price fails to break above, it might continue consolidating. https://www.forexcrunch.com/blog/2024/07/20/usd-cad-weekly-forecast-buyers-emerge-amid-bocs-rate-cut/

2024-07-19 10:29

Japan’s government lowered this year’s growth estimates. A Reuters poll on Friday revealed that the BoJ will forego a hike in July. Japan’s core inflation accelerated in June. The USD/JPY price analysis is slightly bullish as the yen retreats from its recent highs amid signs the BoJ might not hike interest rates in July. Meanwhile, the dollar was steady despite poor US data. The yen has pulled back from its Wednesday highs after a series of interventions by the Bank of Japan to support the currency. However, the focus is now on monetary policy outlooks in the US and Japan. Notably, Japan’s government lowered this year’s growth estimates. This comes from the recent drop in demand amid higher import costs from a weak yen. The government cut growth from 1.3% to 0.9%. A weak economy complicates Japan’s outlook for rate hikes, as higher borrowing costs could further hurt the economy. Meanwhile, a Reuters poll on Friday revealed that the BoJ will forego a hike in July to support weak economic demand. This is bearish for the yen as the rate gap between Japan and the US will remain longer. However, economists also believe the central bank will scale back bond purchases. At the same time, most project the next rate hike in October. There was some positive news for the yen as Japan’s core inflation accelerated in June, keeping hopes for a hike alive. The country’s core CPI rose 2.6%, slightly below forecasts of a 2.7% gain. Still, it was better than the 2.5% increase reported in May. On the other hand, the US dollar was steady despite data showing weakness in the US labor market. Unemployment claims rose to 243,000, beating forecasts for 230,000. USD/JPY key events today Investors do not expect high-impact reports from the US or Japan today, meaning the pair might consolidate. USD/JPY technical price analysis: Price retests 30-SMA after bullish RSI divergence On the technical side, the USD/JPY price has pulled back after reaching the 156.00 key support level. It has found solid resistance at the 30-SMA. Notably, the price is in a developed downtrend with consistent lower highs and lows. However, the RSI is making higher lows, indicating a bullish divergence with the price. Therefore, there is a chance that bulls will break above the 30-SMA to retest the 159.00 resistance. However, if bears are still in control, the price will make a lower low below 156.00. https://www.forexcrunch.com/blog/2024/07/19/usd-jpy-price-analysis-bojs-uncertainty-weighs-on-yen/

2024-07-19 08:48

The ECB did not provide clear guidance on the outlook for rate cuts. Economists believe two more rate cuts will be in the Eurozone this year. US unemployment claims jumped to 243,000 in the last week. The EUR/USD outlook points south as the euro falls after an ambiguous European Central Bank meeting. Meanwhile, the dollar recovered slightly after mixed economic data from the US in the previous session. On Thursday, the ECB maintained rates but did not provide clear guidance on the outlook for rate cuts in the year’s second half, saying inflation remains high. However, forecasts showed that the central bank expects inflation to continue declining. Furthermore, policymakers have lost the confidence they had before the June meeting. Initially, inflation in the Eurozone had been on a clear downtrend. As a result, the ECB committed to cut rates in June. However, as the meeting approached, it became clear that inflation had stalled. Therefore, although the central bank cut rates, some experts felt it was rushed. Others said the ECB only cut because it had committed to do it. Economists believe there will be two more rate cuts in the Eurozone in September and December. However, at the meeting on Thursday, the message was that September was open. This means the outlook will depend on incoming data. On the other hand, the dollar recovered from its lows on Thursday after a set of mixed economic reports. The unemployment claims jumped to 243,000 in the last week, beating forecasts for 230,000. Meanwhile, manufacturing activity in the US Atlantic region grew more than expected in July. EUR/USD key events today There will be no key reports from the Eurozone or the US today. As a result, investors will continue digesting yesterday’s ECB meeting. EUR/USD technical outlook: Bearish momentum targets 1.0840 support On the technical side, the EUR/USD price trades below the 30-SMA with the RSI under 50, showing a bearish trend. The shift in sentiment came after the RSI made a bearish divergence with the price. This was a sign that the previous bullish trend had reached a point where bulls were tired. As a result, bears took control with a break below the 30-SMA. At the moment, they are eyeing the 1.0840 support level. The price must now make lower lows and highs to confirm a bearish trend. Otherwise, the price might start consolidating or resume the bullish trend. https://www.forexcrunch.com/blog/2024/07/19/eur-usd-outlook-euro-slides-after-ecbs-uncertain-outlook/

2024-07-18 10:23

Data showed a higher-than-expected number of unemployment claims in the UK. Average UK weekly earnings minus bonuses grew by 5.7%. The pound has gained about 2.1% in 2024 against the dollar. The GBP/USD outlook is slightly bearish as the pound retreats from recent highs after downbeat employment figures. However, the bullish trend might continue since the dollar is weak amid an increase in Fed rate cut expectations. Data on Thursday showed a higher-than-expected number of unemployment claims in the UK in the previous month. The claimant count was 32,300, compared to estimates of 23,400. Still, this was a decline from the last reading of 51,900. If unemployment is higher than estimated, the economy performs poorer than expected. This could pressure the Bank of England to start lowering borrowing costs. However, separate employment figures revealed that average weekly earnings minus bonuses grew by 5.7%, meeting forecasts. Furthermore, data from the previous session showed that service inflation remained high at 5.7%. Therefore, market participants have lowered the chances that the BoE will cut rates in August from 50% to 40%. Notably, unlike other major currencies, the pound has remained resilient against the dollar this year. So far, it has gained about 2.1% in 2024 against the dollar. The recent rally came due to increased expectations for a Fed rate cut. Inflation in the US has maintained its downtrend, giving policymakers more confidence it will reach the target. As a result, investors are placing a 100% likelihood of a rate cut in September. This has pressured the dollar, allowing the pound to rally. Retail sales data tomorrow could shed more light on the UK economy. GBP/USD key events today US unemployment claims GBP/USD technical outlook: Price retreats to 30-SMA after bearish RSI divergence On the technical side, the GBP/USD price is in a bullish trend that recently made a new high. However, the price is currently pulling back and is nearing the 30-SMA support. Bulls made a solid attempt to push the price above the 1.3002 key level. However, as the price made a higher high, the RSI made a lower one, indicating weakness. Consequently, the price fell back below the key level. If bears are stronger, they might take over with a break below the 30-SMA. However, if the SMA holds firm, bulls might retest the 1.3002 level and break above to make a higher high. https://www.forexcrunch.com/blog/2024/07/18/gbp-usd-outlook-pound-slips-below-1-30-amid-poor-jobs-report/

2024-07-18 08:55

There was an unexpected jump in Australia’s employment in June. Investors raised the likelihood of an RBA rate hike in August from 12% to 20%. Investors are fully pricing in a rate cut at the Fed’s September meeting. The AUD/USD forecast remains bearish. However, the pair managed to recover slightly after a mixed Australian jobs report. This week, the currency’s downtrend persisted despite rising expectations of a Fed rate cut. Data on Thursday showed that Australia’s economy added 50,200 jobs in June, bigger than the forecast of 20,000. However, the unemployment rate also increased from 4.0% to 4.1%, giving a mixed picture of the labor market. Still, demand in Australia’s labor market remains robust. Consequently, after the report, investors raised the likelihood of an RBA rate hike in August from 12% to 20%. At the same time, markets expect the first rate cut well into next year. The next major report will be the Consumer Price Index later this month. Inflation might increase, which could push up bets for a rate hike. Meanwhile, the opposite is happening in the US, where policymakers are gaining confidence that inflation will reach the 2% target. At the same time, data on Tuesday revealed that the economy remains on solid ground, with retail sales beating forecasts. Therefore, the Fed might achieve a soft landing with inflation reaching the 2% target without a recession. Furthermore, investors are fully pricing in a rate cut at the Fed’s September meeting. The policy outlooks between Australia and the US are diverging. The Fed might start cutting soon while there is still a risk of a rate hike by the RBA. AUD/USD key events today US unemployment claims AUD/USD technical forecast: Bears struggle to find footing after reversal On the technical side, the AUD/USD price is in a downtrend, trading below the 30-SMA resistance. At the same time, the RSI sits slightly below 50, supporting bearish momentum. The trend recently reversed when bulls failed to reach the 0.6800 key level. Bears took control when the price broke below the 30-SMA and the bullish trendline. The sharp decline then paused to retest the trendline before continuing lower. However, bears have still not found their footing below the SMA. The price must now make lower lows and highs to confirm a bearish trend. Therefore, it might soon retest the 0.6700 key support level. https://www.forexcrunch.com/blog/2024/07/18/aud-usd-forecast-aussie-rises-marginally-on-mixed-jobs-data/