2024-07-14 08:46

Fed Chair Powell said policymakers needed more confidence inflation was falling. US inflation fell for the first time in four year in June. Investors pushed up chances for a September rate cut to 93%. The EUR/USD weekly forecast is bullish as the dollar falls after a softer-than-expected US inflation report. Ups and downs of EUR/USD The euro had a bullish week where the dollar ended lower amid an increase in Fed rate cut expectations. At the same time, there was relief as the cloud of political uncertainty in France lifted after the last round of elections. During the week, Fed Chair Powell spoke with a cautious tone, saying policymakers needed more confidence inflation was falling. As a result, the dollar strengthened. However, this move reversed when the US consumer inflation report came out. Inflation fell for the first time in four year in June. This surprised economists who had expected it to increase. As a result, investors pushed up chances for a September rate cut to 93%. Meanwhile, wholesale inflation accelerated in June. Next week’s key events for EUR/USD Next week’s calendar for EUR/USD will be light with the ECB bank lending survey and the US retail sales report. After a week of heavy inflation data, markets will just focus on the state of consumer spending in the US. The recent trend has been poor economic figures showing weakness in the economy. Therefore, there is a high chance this will continue. A decline in retail sales will pile more pressure on the Fed to start lowering interest rates. On the other hand, if the report beats estimates, it could lead to a decline in Fed rate cut expectations. Still, it would be one positive report after a series of poor ones. EUR/USD weekly technical forecast: Bulls prepare to break the 1.0900 resistance On the technical side, the EUR/USD price has reached the 1.0900 key resistance level after a strong bullish move. This has put the price well above the 22-SMA supporting a bullish bias. At the same time, the RSI is quickly approaching the overbought region, showing a surge in bullish momentum. In the coming week, there is a high chance the price will break above 1.0900 to make a higher high. This would confirm a new bullish trend after the first higher low near the 1.0700 key level. Moreover, it would clear the path for a rally to the 1.618 Fib extension level. https://www.forexcrunch.com/blog/2024/07/14/eur-usd-weekly-forecast-us-dollar-slips-on-low-inflation/

2024-07-13 08:46

Powell noted that inflation was on a downtrend. US consumer inflation data showed a bigger-than-expected easing in price pressures. US wholesale inflation figures came in higher than expected. The USD/CAD weekly forecast is bearish as easing US inflation has raised the likelihood of a September Fed cut. Ups and downs of USD/CAD The USD/CAD pair had a slightly bearish week but closed well above its lows. During the week, investors focused on Powell’s testimony and US inflation data. Although Powell was cautious, he noted that inflation was on a downtrend. After his speech, consumer inflation data showed a bigger-than-expected easing in price pressures. This led to a surge in Fed rate cut expectations which weighed heavily on the dollar. However as the week ended, US wholesale inflation figures came in higher-than-expected, allowing the dollar to recover slightly. Next week’s key events for USD/CAD Next week, the US will only release a retail sales report. Meanwhile, Canada will release inflation and retail sales figures. The US retail sales report will add to the recent reports that have shaped the Fed’s rate cut outlook. This week, the likelihood of a September cut rose to 93% after the consumer inflation report. Consequently, if retail sales ease, there will be more certainty about a rate cut in September. Meanwhile, Canada’s inflation report will impact BoC rate cut bets. Last month, inflation in Canada unexpectedly accelerated, leading to a drop in bets for a cut in July. If inflation spikes again, Canada’s central bank might not cut in July. However, if it eases, chances of a cut will go up. USD/CAD weekly technical forecast: Bears face the 1.3601 support On the technical side, the USD/CAD price is challenging the 1.3601 key support level. The bias is bearish because the price trades below the 22-SMA with the RSI below 50 in bearish territory. However, after the previous bullish move, the price has been caught in a sideways move between the 1.3601 support and the 1.3800 resistance. This consolidation could be a pause in the previous bullish trend or the start of a reversal. The price must break below the 0.382 Fib retracement level and the 1.3601 support to confirm a reversal. On the other hand, if this is just a pause, the 1.3601 support might hold firm, allowing bulls to retest and possibly break above 1.3800. https://www.forexcrunch.com/blog/2024/07/13/usd-cad-weekly-forecast-cooling-inflation-prompting-cut-in-sep/

2024-07-12 10:34

The US CPI report showed the first decline in inflation since 2020. In June, inflation fell by 0.1% when economists had expected it to increase by 0.1%. The ECB might lower borrowing costs again in September and December. The EUR/USD price analysis shows strong bullish momentum as the dollar falls amid a surge in expectations for a September Fed cut. Meanwhile, economists expect the European Central Bank to cut rates twice more this year. It was a dark day for the dollar on Thursday when the US CPI report showed the first decline in inflation since 2020. In June, inflation fell by 0.1% when economists had expected it to increase by 0.1%. At the same time, the annual figure increased by a smaller-than-expected 3.0%. This was a welcome surprise for the Fed which has remained cautious despite the recent downtrend. Powell insisted that policymakers need more evidence inflation will reach the 2% target. Thursday’s report opens the door for a rate cut. As a result, the likelihood of a cut in September rose from 73% to 93%. Furthermore, if policymakers assume a dovish outlook, there will be more declines for the dollar. Additionally, a dovish Fed would allow other major central banks like the BoC and the ECB to continue cutting interest rates. A Reuters poll on Thursday revealed that the ECB will lower borrowing costs again in September and December. However, there is a higher risk that the central bank will implement just one rate cut since services inflation in the Eurozone remains a big headache. As a result, policymakers have said there is no hurry to cut interest rates. Eurozone inflation eased to 2.5% from 2.6% in May. Meanwhile, services inflation was at 4.1% in June. EUR/USD key events today US Core PPI m/m US PPI m/m Preliminary UoM consumer sentiment EUR/USD technical price analysis: Bullish trend continues with a higher high On the technical side, the EUR/USD price has broken above the 1.0850 key resistance level to make a higher high. This indicates that the bullish trend remains intact. Moreover, the bullish bias is strong because the price trades well above the 30-SMA with the RSI near the overbought region. The uptrend paused after reaching the 1.0900 key psychological level. The price might retreat to retest the recently broken 1.0850 level before challenging 1.0900 for a new high. https://www.forexcrunch.com/blog/2024/07/12/eur-usd-price-analysis-fed-rate-cut-expectations-surge/

2024-07-12 08:53

The yen surged nearly 3% on Thursday after a downbeat US inflation report. There is speculation in the market that Japan intervened on Thursday. The US Consumer Price Index fell by 0.1% in June. The USD/JPY outlook leans mildly bullish as the yen pulls back following its surge in the previous session. Nevertheless, the overall trend remains downward after the dollar declined due to lower-than-anticipated inflation figures. The yen surged nearly 3% on Thursday after a downbeat US inflation report. However, there was speculation in the market that Japan had also intervened to strengthen the currency. Some news outlets like Asahi reported that officials had intervened in the market. On Friday, top currency diplomat Masato Kanda failed to comment on the possible intervention. However, he reminded traders that Japan will take necessary action in the FX market. Meanwhile, the dollar fell sharply after inflation dropped for the first time in 4 years. This was a big boost for Fed rate cut expectations. Moreover, it came after Powell said that policymakers needed more evidence inflation was on a downtrend. Notably, the Consumer Price Index fell by 0.1% in June. Meanwhile, the annual figure increased by 3.0%, a decline from the previous month’s 3.3% increase. Price pressures eased as gasoline became cheaper. This report should give Fed officials more confidence that inflation is on a downward path and will eventually reach the 2% target. As a result, market participants raised the likelihood of a Fed cut in September from 73% to 93%. Traders are almost certain the US central bank will start lowering borrowing costs in September. As a result, the dollar lost its appeal, allowing the yen to recover. USD/JPY key events today US core PPI m/m US PPI m/m Prelim UoM consumer sentiment USD/JPY technical outlook: Sentiment shifts after sharp spike in bearish momentum On the technical side, the USD/JPY price is bouncing higher after reaching the 158.01 key support level. The price recently made a sharp bearish move that led to a shift in sentiment to bearish. The pair fell below the 30-SMA and the RSI dipped into the oversold region, supporting a bearish bias. However, after such a steep move, the price is pulling back before continuing lower. The pullback could retest the 158.01 level and the 30-SMA. If bears hold on to control, the price will breach 158.01 to revisit the 156.01 support. https://www.forexcrunch.com/blog/2024/07/12/usd-jpy-outlook-yen-retreats-following-solid-rally/

2024-07-11 10:17

The UK GDP rose by 0.4% in May, above estimates of 0.2%. Services inflation and wage growth in the UK remain high. Investors are waiting to see the US consumer inflation report for June. The GBP/USD outlook points North as the pound rallies after data revealed a bigger-than-expected expansion in the UK economy in May. At the same time, investors were eagerly awaiting the US inflation report. The pound hit a four-month high on Thursday after the UK GDP report showed the economy expanded more quickly than economists forecast in May. The GDP rose by 0.4% in May, above estimates of 0.2%. Consequently, the likelihood of a BoE rate cut in August fell. If demand is rising again, it could drive inflation higher. Therefore, policymakers will hesitate to start lowering borrowing costs. At the same time, services inflation and wage growth in the UK remain high. Although inflation has reached 2%, the underlying price pressure might continue challenging the BoE rate cut outlook. At the moment, there is a 50% chance the UK central bank will cut rates in August. Furthermore, the rate cut outlook will continue changing depending on what the Fed does. Recent comments from Powell indicate caution despite softer inflation and a slowdown in the economy. However, policymakers have noted the weaker demand in the labor market that could pave the way for rate cuts. Investors are waiting to see the consumer inflation report for June. If there is further easing, it could give policymakers the confidence they need to start cutting interest rates. A more dovish Fed will allow other major central banks to assume similar stances. GBP/USD key events today US Consumer Price Index report US initial jobless claims GBP/USD technical outlook: Bullish momentum surges beyond 1.2850 On the technical side, the GBP/USD price is climbing after breaking above the 1.2850 key resistance level. The bullish bias is strong because the price has respected the 30-SMA as support and has made a higher high. At the same time, the RSI trades in the overbought region, supporting solid momentum. The new high is a sign that bulls are ready to continue the uptrend. Therefore, the price might soon revisit the 1.2900 key psychological level. The bullish trend will continue as long as the price trades above the 30-SMA and the RSI stays above 50. https://www.forexcrunch.com/blog/2024/07/11/gbp-usd-outlook-pound-soars-on-upbeat-uk-gdp/

2024-07-11 08:30

USD/JPY forecast is bullish after Powell spoke cautiously. Analysts expect further easing in price pressures from 3.4% to 3.1% in June. Japan’s wholesale inflation increased in June. The USD/JPY forecast is bullish as the dollar firms ahead of US inflation figures. Meanwhile, the yen remained frail despite data showing a surge in Japan’s wholesale inflation in June. On Tuesday and Wednesday, Powell spoke cautiously, saying the Fed needed more evidence that inflation would fall to the 2% target. As a result, the dollar got a boost, which weighed on the yen. At the same time, the likelihood of a rate cut in September slipped from 76% to 73%. As long as the Fed keeps delaying rate cuts, the 5% rate gap between Japan and the US will remain. Therefore, the yen will likely continue dropping. However, the upcoming US inflation report could change this outlook. Analysts expect further easing in price pressures from 3.4% to 3.1% in June. This would bring consumer inflation closer to the Fed’s 2% target. Consequently, it would give policymakers more confidence to cut rates. Moreover, softer inflation would pressure the dollar, relieving the yen. The yen can only strengthen when the rate gap between Japan and the US shrinks. This can only happen with BoJ hikes and Fed rate cuts. However, both central banks have been delaying these moves. The Bank of Japan is trying to support a vulnerable economy that could worsen with higher borrowing costs. On the other hand, the Fed is waiting for more evidence that inflation will reach 2%. Elsewhere, Japan’s wholesale inflation increased in June as a weak yen raised import costs, including raw materials. This raised the likelihood of a BoJ hike in July. USD/JPY key events today US Core CPI m/m US CPI m/m US CPI y/y US unemployment claims USD/JPY technical forecast: Bears fail to keep the price below the 30-SMA On the technical side, the USD/JPY price is in a bullish move, approaching the 162.01 critical level. Initially, bears had taken control when the price broke below the 30-SMA after a bearish RSI divergence. However, the move failed to continue below the 160.50 support level. As a result, bulls took back control. However, they must make a higher high to confirm a continuation of the previous bullish trend. Otherwise, the price might start consolidating with support at 160.50 and resistance at 162.01. https://www.forexcrunch.com/blog/2024/07/11/usd-jpy-forecast-dollar-firms-versus-yen-ahead-of-us-inflation/