2024-07-17 10:33
The US consumer inflation report surprised to the downside. US retail sales beat forecasts at 0.0%. Price pressures in Canada eased from 2.9% to 2.7% in June. The USD/CAD forecast has turned bearish as the dollar resumes its decline due to higher expectations for the Fed’s September rate cut. Meanwhile, although the Canadian dollar is strengthening, investors are more convinced that the Bank of Canada will cut rates in July. The US dollar started falling last week after the consumer inflation report surprised to the downside. As a result, markets moved to fully price in the first US cut in September. At the same time, Powell sounded more confident about the decline in price pressures on Monday. As a result, recent upbeat economic figures have failed to trigger a significant rally in the dollar. Notably, data on Tuesday revealed that retail sales beat forecasts at 0.0%. Economists had expected weaker consumer spending, with sales at -0.3%. After the report, the dollar briefly rallied before resuming its downtrend, strengthening the loonie. Meanwhile, in Canada, inflation figures on Tuesday increased the chances of another Bank of Canada rate cut in July. Price pressures eased from 2.9% to 2.7% in June, weighing on the Canadian dollar. Furthermore, the figure was smaller than the forecast of 2.8%. After the report, investors increased the likelihood of a rate cut in July to 90%. This would be the second BoC rate cut to spur economic growth. Moreover, it would indicate strong confidence among policymakers that inflation will continue falling. USD/CAD key events today There won’t be any key events from Canada or the US. Consequently, the pair might consolidate. USD/CAD technical forecast: 0.618 Fib triggers pullback towards 30-SMA On the technical side, the USD/CAD price is retreating after a failed attempt to trade above the 0.618 Fib retracement level. However, the bullish bias remains intact since the price sits above the 30-SMA and the RSI exceeds 50. Consequently, the retreat might pause at the SMA line, which acts as support in a bullish trend. Sentiment will remain bullish as long as the price stays above the SMA. Therefore bulls might break above the Fib level to retest the 1.3750 resistance level. Meanwhile, a break below the SMA will signal a reversal that might revisit the 1.3600 support level. https://www.forexcrunch.com/blog/2024/07/17/usd-cad-forecast-dollar-tumbles-as-feds-sep-rate-cut-looms/
2024-07-17 10:32
Inflation in the UK remained at an annual rate of 2% in June. UK services inflation came in at 5.7%. US sales were unchanged in June, better than economist expectations for a 0.3% decline. The GBP/USD price analysis shows solid bullish sentiment as the pound rallies after a higher-than-expected reading on UK inflation. Meanwhile, the dollar retreated from Tuesday’s highs as the effects of an upbeat retail sales report wore off. Inflation in the UK remained at an annual rate of 2% in June, higher than expectations of a 1.9% increase. At the same time, services inflation came in at 5.7%, which was higher than the forecast of 5.6%. The upbeat figures might cause Bank of England policymakers to be more cautious. Moreover, the numbers lowered the likelihood of a rate cut in August, boosting the pound.Meanwhile, the US dollar fell after rallying on upbeat retail sales data in the previous session. Sales were unchanged in June, better than economist expectations for a 0.3% decline. The report showed that the economy was doing fairly well, and the risks of a recession were low. However, inflation is also in a downtrend, meaning the Fed is getting closer to its first rate cut. Last week’s soft inflation figures pushed investors to fully price in the first rate cut by September, putting significant downward pressure on the dollar. As long as inflation continues falling, policymakers will be confident enough to cut rates even if the economy remains resilient. However, if inflation pauses or spikes while the economy is strong, the Fed will delay rate cuts. GBP/USD key events today Neither the US nor the UK will release more key reports today. Therefore, investors will keep digesting Britain’s inflation figures. GBP/USD technical price analysis: Bulls breach 1.3000 barrier On the technical side, the GBP/USD price is breaking above the 1.3000 barrier with a solid bullish candle. However, it must close well above this level to confirm this break. Notably, the price has made consistent higher highs and lows, indicating a bullish trend. At the same time, it has respected the 30-SMA as support, trading above the line. However, the RSI tells a different story. The indicator has made a bearish divergence with the price, which might indicate fading bullish momentum. If the bulls are exhausted, they might fail to sustain a move above 1.3000 and pull back. https://www.forexcrunch.com/blog/2024/07/17/gbp-usd-price-analysis-pound-jumps-amid-hotter-inflation/
2024-07-16 10:09
A Bank of Canada survey showed increased expectations for lower inflation. Investors raised the chances of a July BoC rate cut from 77% to 80%. In June, economists expect inflation in Canada to ease from 2.9% to 2.8%. The USD/CAD price analysis reveals a bullish trend as the Canadian dollar weakens amid increased chances of another Bank of Canada rate cut this month. Meanwhile, the dollar fluctuated amid increased bets for a September Fed rate cut and a higher likelihood of a Trump win. On Monday, the Canadian dollar plunged after a Bank of Canada survey that showed increased expectations for lower inflation in Canada. Businesses in the country expect a slowdown in input and selling prices. This means that inflation might continue falling. As a result, investors raised the chances of a July rate cut from 77% to 80%. However, this outlook might change significantly with Tuesday’s inflation report. The last report showed a spike in inflation that led to a decline in BoC rate cut expectations. In June, economists expect the figures to ease from 2.9% to 2.8%. A bigger-than-expected decline would increase the chances of a cut this month. On the other hand, if there is another spike, the Bank of Canada might maintain rates this month, propelling the Canadian dollar higher. Meanwhile, the dollar initially rose on Monday as Trump’s assassination attempt raised the chances he would win November’s election. A Trump win would benefit the dollar. However, the move reversed when Powell spoke, indicating increasing confidence that inflation will reach the 2% target. As a result, markets moved to fully price in a rate cut in September. USD/CAD key events today Canada Consumer Price Index US retail sales report USD/CAD technical price analysis: Bullish momentum pauses at 0.618 Fib On the technical side, the USD/CAD price has met solid resistance at the 0.618 Fib retracement level. Bulls have been in control since they took over at the 1.3600 key level. However, the price has risen well above the 30-SMA and might need to pull back before continuing higher. If the Fib level holds strong, the price might pause or revisit the SMA. If the price remains above the SMA, the bullish trend will continue. A break above the Fib level would allow the price to reach the 1.3750 resistance level. https://www.forexcrunch.com/blog/2024/07/16/usd-cad-price-analysis-bulls-gain-traction-ahead-of-boc/
2024-07-16 08:45
Powell noted that recent inflation figures had increased confidence that price pressures were declining. Markets are fully pricing in a Fed rate cut in September. Investors are preparing for the ECB policy meeting on Thursday. The EUR/USD outlook paints a bullish picture, with the dollar weak after Powell’s dovish comments. Meanwhile, investors are gearing up for the US retail sales report later in the day. Furthermore, anticipation is building ahead of Thursday’s European Central Bank policy meeting. On Monday, Powell noted that recent inflation figures had increased confidence that price pressures were declining in a sustainable way. Consequently, inflation could soon reach the central bank’s 2% target. More confidence among policymakers paves the way for rate cuts. As a result, after Powell’s comments, markets are fully pricing in a rate cut in September. Moreover, investors expect the Fed to cut by 68 basis points this year. However, this outlook might change as more data comes in since there is still a long way to go before September. Investors will focus on the US retail sales report, which might show a 0.3% monthly decline. Weaker sales would point to declining consumer spending, strengthening the case for rate cuts. Meanwhile, investors are preparing for the ECB policy meeting on Thursday, where the central bank will likely hold rates. However, traders will focus on Christine Lagarde’s comments for clues on future rate cuts. Since the last meeting, inflation has eased. However, policymakers are concerned about services inflation which remains high. Last week, a Reuters poll revealed that the ECB might cut rates in September and December. However, there is a chance the central bank will cut once. EUR/USD key events today US core retail sales m/m US retail sales m/m EUR/USD technical outlook: Bearish RSI divergence On the technical side, the EUR/USD price has paused near the 1.0900 key resistance level after a robust bullish surge. The 30-SMA trades well below the price, showing a bullish trend. At the same time, the RSI is in bullish territory above 50. However, as the price made higher highs near 1.0900, the RSI made lower highs, indicating a bearish divergence. If the divergence plays out, the price will likely pull back to retest the 30-SMA or lower. A break below the SMA would confirm a shift in sentiment. However, if bulls remain in control, the price could reach 1.0950. https://www.forexcrunch.com/blog/2024/07/16/eur-usd-outlook-dollar-dips-as-powell-strikes-dovish-tone/
2024-07-15 10:31
The UK economy grew faster than expected in May. BoE’s Swati Dhingra called for the central bank to start lowering borrowing costs. The likelihood of a Fed rate cut in September rose from 73% to 94%. The GBP/USD outlook leans bullish as the pound extends last week’s rally after positive UK data. Meanwhile, the dollar remained weak after the US inflation report showed the first decline in four years. Data on Thursday last week showed that the UK economy grew faster than expected in May. As a result, there was less confidence in a Bank of England rate cut in August. This propelled the pound higher. However, rate-setter Swati Dhingra on Monday called for the central bank to start lowering borrowing costs. According to her, high interest rates have lowered demand in the economy, so there is little risk of a spike in inflation. However, markets barely reacted as she is a known dove. Notably, Swati has voted for a rate cut in the UK since February. Currently, there is a 50% chance that the BoE will cut rates in August. Meanwhile, the dollar had a brief recovery on Monday as investors digested news of an attempt at Trump’s life. The incident increased the chances that Trump will win the election in November. A Trump win is bullish for the dollar as Treasuries might increase, boosting demand for the US currency. However, the move soon reversed as the market focused on the outlook for Fed rate cuts. Data on Thursday showed that inflation fell by 0.1% on a monthly basis. This was an unexpected decline and a big milestone for the US central bank. The softer figures led to a surge in the likelihood of a rate cut in September from 73% to 94%. GBP/USD key events today Empire State Manufacturing Index Fed Chair Powell Speaks GBP/USD technical outlook: RSI points to slight weakness in the new high On the technical side, the GBP/USD price is approaching the 1.3000 key psychological level that might be a strong barrier. The bullish bias is strong, with the price far over the 30-SMA support. At the same time, the RSI supports solid bullish momentum in the overbought region. However, the RSI also shows slight easing in bullish momentum from the previous high. The bearish divergence shows exhaustion. If bulls are not strong enough to breach the 1.3000 resistance, the price might pull back to retest the 1.2900 support or the 30-SMA. https://www.forexcrunch.com/blog/2024/07/15/gbp-usd-outlook-pound-advances-further-on-upbeat-uk-data/
2024-07-15 08:33
The dollar recovered briefly on Monday after Trump’s assassination attempt. US inflation unexpectedly fell for the first time in June. Data on Friday revealed that inflation expectations in Japan have risen. The USD/JPY forecast is pessimistic as the yen remains close to a four-week peak following indications that the Bank of Japan intervened in the markets on Thursday. Meanwhile, the dollar recovered briefly on Monday as Trump’s assassination attempt raised the chances of his victory. The dollar edged higher as the likelihood of a Trump win increased after an attempt at his life. A Trump win would mean higher tariffs and looser fiscal policy. Moreover, the earnings outlook could improve. However, this was not enough to reverse last week’s moves after the US consumer inflation report. Inflation unexpectedly fell for the first time in June, surprising economists who had expected a slight increase. The annual figure also moved closer to the US central bank’s target, increasing by a smaller-than-expected 3.0%. Consequently, there was an increase in Fed rate cut expectations. The likelihood of a cut in September rose to 94% from 73%. Furthermore, the yen surged after the CPI report, with data on Friday showing that the Bank of Japan intervened in the markets. Notably, the BoJ used over 3.37 trillion yen to buy the currency on Thursday. However, top officials kept quiet about the intervention. Elsewhere, data on Friday revealed that inflation expectations in Japan have risen. 90% of households expect an increase in prices a year from now. This could encourage the Bank of Japan to continue hiking interest rates. The prospect of cuts by the Fed and hikes by the BoJ benefit the yen. USD/JPY key events today Empire State Manufacturing Index Fed Chair Powell Speaks USD/JPY technical forecast: Solid bearish momentum weakens 158.01 barrier On the technical side, the USD/JPY price trades well below the 30-SMA, indicating a steep bearish move. Bears took control with a solid bear candle that broke below the 30-SMA and the 160.50 key level. The decline paused at the 158.01 support level. Here, bulls emerged but were not strong enough to retest the 30-SMA. As a result, bears are on the verge of breaking below 158.01. If they succeed, the next hurdle will be at the 156.01 level. On the other hand, if they fail, the price will likely climb to retest the 30-SMA before the downtrend continues. https://www.forexcrunch.com/blog/2024/07/15/usd-jpy-forecast-boj-intervention-leads-to-4-week-lows/
