2024-07-03 05:47

Oil briefly hit a two-month high, which helped the Canadian dollar rally. Canada’s manufacturing sector remained in contraction in June. The US dollar eased after Powell’s dovish remarks. The USD/CAD forecast leans bearish as the Canadian dollar firms after a brief rally in oil prices. At the same time, the loonie got support from a weaker US dollar after Powell made mildly dovish remarks regarding inflation. Canada’s economy benefits when fuel prices increase, as the country is a net oil exporter. At the same time, the country’s currency rises. On Tuesday, oil briefly hit a two-month high, which helped the Canadian dollar rally against the US dollar. Moreover, the loonie held on to gains despite a pullback in oil prices. Meanwhile, data from Canada showed the manufacturing sector remained in contraction in June. The manufacturing PMI held at 49.3, showing business activity was unchanged from the previous month. Notably, recent data on GDP and inflation has surprised to the upside. Consequently, expectations for BoC rate cuts have fallen. The chances of a cut in July fell below 50%. However, this might keep changing with incoming data. On the other hand, the US dollar eased after Powell’s remarks in the previous session. Powell acknowledged that there was progress on inflation and that the central bank would likely cut rates later in the year. Although he did not signal the number of cuts or the timing, it was clear that he was more confident inflation was on a downtrend. Consequently, rate cut expectations rose. Elsewhere, data revealed a surge in job vacancies in the US to 8.140 million compared to expectations of 7.910 million openings. USD/CAD key events today US private employment change US jobless claims US ISM services PMI FOMC minutes USD/CAD technical forecast: Bears in the lead after a false breakout On the technical side, the USD/CAD price made a false breakout above its channel resistance before bears took back control. Consequently, the price made a whiplash move as sentiment shifted suddenly from bullish to bearish. The price now trades below the 30-SMA, and the RSI is in bearish territory. Therefore, with bears in the lead, the price will likely continue lower to test the 1.3640 support level. This also means that the downtrend might continue with a lower low. However, if the price fails to make a lower low, bulls might make another attempt to break out of the bearish channel. https://www.forexcrunch.com/blog/2024/07/03/usd-cad-forecast-oil-price-surge-boosts-canadian-dollar/

2024-07-03 05:33

Powell noted significant progress on inflation in the US. There was an unexpected jump in US job openings in May. Eurozone inflation fell last month, but underlying price pressures remained high. The EUR/USD price analysis paints a bullish picture as the dollar remains fragile after Powell’s slightly dovish remarks. Meanwhile, the euro was strong, as data revealed that underlying inflation in the Eurozone remained high. The dollar eased on Tuesday after Powell’s speech, in which he assumed a moderately dovish tone. Powell noted significant progress on inflation, which could allow the Fed to cut rates later this year. Consequently, investors raised the likelihood of a September rate cut from 63% to 69%. Meanwhile, US employment data revealed an unexpected jump in job openings in May, indicating tight labor market conditions. Vacancies rose to 8.140 million compared to forecasts of 7.910 million. This report should have propelled the dollar higher. However, the market focus was on Powell’s speech. Elsewhere, Eurozone inflation fell last month, but underlying price pressures remained high. The headline CPI figure dropped to 2.5% after a 2.6% increase in May. Meanwhile, core inflation held at 2.9% compared to estimates of 2.8%, as service prices kept rising. Therefore, ECB President Christine Lagarde said there was no hurry to lower borrowing costs. Policymakers need time to watch where inflation will head. Other data from the Eurozone showed that the unemployment rate held at a low of 6.4% in May. The ECB might delay cuts due to labor market strength. As a result, chances of a cut in July have fallen while those in September have risen. EUR/USD key events today US ADP non-farm employment change US unemployment claims US ISM services PMI FOMC meeting minutes EUR/USD technical price analysis: Bulls make second attempt at 1.0750 barrier On the technical side, the EUR/USD price is making another attempt to breach the 1.0750 resistance level. The first attempt failed when the price fell back below the level. However, it respected the 30-SMA as support, a sign that bulls are in control. At the same time, the RSI has stayed above 50, supporting bullish momentum. Therefore, there is a high chance the price will break above 1.0750. If this happens, bulls will target the next resistance at 1.0850. On the other hand, if the attempt fails, the price will likely retest the 1.0675 support, staying in consolidation. https://www.forexcrunch.com/blog/2024/07/03/eur-usd-price-analysis-gaining-amid-feds-dovish-comments/

2024-07-02 10:05

Japan downgraded its Q1 GDP figures to show that the economy shrank more than reported. A rally in US Treasury yields weighed on the yen. Investors are awaiting Fed Chair Powell’s speech. The USD/JPY price analysis shows a strong uptrend as the yen continues its slide due to the interest rate differential between Japan and the US. At the same time, economic data from Japan shows a small chance that the Bank of Japan will hike rates at the next policy meeting. The dollar continued its rally against the yen on Tuesday as the market focused on the wide interest rate gap between Japan and the US. Notably, data from Japan on Monday showed that the country downgraded its Q1 GDP figures, showing that the economy shrank more than reported. The economy contracted 2.9% annually, compared to the reported 1.8% decline. These new figures complicate the outlook for rate hikes in Japan. A vulnerable economy could weaken further with high borrowing costs. However, if the Bank of Japan continues to delay rate hikes, the rate gap between Japan and the US will remain wide, hurting the yen. At the same time, a rally in US Treasury yields weighed on the yen. Yields soared in the previous session, boosting the dollar as markets priced in the possibility of a Trump win. This came after last week’s debate, in which Trump came out stronger than Biden. A Trump government would likely lead to an increase in inflation, which would strengthen the dollar. Meanwhile, investors are awaiting Fed Chair Powell’s speech later today for clues on the rate cut outlook. A cautious tone could further boost the dollar. USD/JPY key events today Fed Chair Powell’s speech US JOLTS job openings USD/JPY technical price analysis: Bulls weaken as they approach the 162.01 level On the technical side, USD/JPY is quickly approaching the 162.01 level. The price is in a steep bullish trend, well above the 30-SMA. At the same time, the RSI trades near the overbought region, supporting bullish momentum. However, it has made a lower high while the price has made a higher high. This indicates a bearish divergence due to fading bullish momentum. Therefore, there is a high chance that the price will soon reverse. If this happens, it might retest the 30-SMA or break below to the 160.00 support level. https://www.forexcrunch.com/blog/2024/07/02/usd-jpy-price-analysis-no-respite-for-yen-amid-rate-differential/

2024-07-02 08:41

US Treasury yields soared overnight amid expectations for a Trump win. Data on Monday showed that the US manufacturing sector shrank further in June. Investors are pricing a 36% chance that the RBA will hike rates in August. The AUD/USD outlook shows solid bearish sentiment as the dollar strengthens with rising Treasury yields. Meanwhile, investors were digesting minutes of the Reserve Bank of Australia’s last policy meeting. US Treasury yields soared overnight amid expectations for a Trump win. After the presidential debate last week, it was clear that Trump did better than Biden. As a result, investors have been pricing the possibility of a Trump presidency, which would increase tariffs and government borrowing. This, in turn, would lead to a rise in inflation, boosting the dollar. Meanwhile, data on Monday showed that the US manufacturing sector shrank further in June. The PMI number fell from 48.7 to 48.5 compared to expectations for an increase to 49.2. A decline in business activity is a sign that the economy is slowing down. Therefore, it supports Fed rate cut expectations. Typically, such a report would have weighed on the dollar. However, a rally in Treasury yields overshadowed this downbeat report. Market participants eagerly await Powell’s speech and the nonfarm payrolls report to provide more clues on the outlook for Fed rate cuts. Elsewhere, RBA minutes showed that policymakers debated raising rates to lower inflation. However, they decided to keep rates steady due to the risk of a significant slowdown in Australia’s labor market. Still, investors are pricing in a 36% chance that the central bank will hike rates in August. This will depend on the inflation figures for Q2. AUD/USD key events today Fed Chair Powell speaks US JOLTS job openings AUD/USD technical outlook: Bears test the 0.6640 solid barrier On the technical side, the AUD/USD price trades near the 0.6640 solid support level. The price has remained in a sideways move between the 0.6580 support and the 0.6700 resistance levels. Therefore, there is no clear direction in the market. Nonetheless, bears are currently in control, with the price trading below the 30-SMA and the RSI slightly below 50. If bears maintain control, the price will likely break below 0.6640 to retest the 0.6580 support level. However, if the support holds firm, the price will break above the SMA to retest the 0.6700 resistance level. https://www.forexcrunch.com/blog/2024/07/02/aud-usd-outlook-rising-treasury-yields-bolster-us-dollar/

2024-07-01 10:27

The Canadian dollar ended the month 0.3% lower, weakened by the Bank of Canada’s first rate cut. Canada’s Gross Domestic Product increased by 0.3% in April as expected. The US dollar fell when data revealed softer inflation in May. The USD/CAD outlook remains bearish as the Canadian dollar holds firm after Friday’s upbeat GDP report. Meanwhile, the US dollar recovered but remained fragile after data further confirmed that inflation was easing towards the Fed’s 2% target. The Canadian dollar ended the month 0.3% lower, weakened by the Bank of Canada’s first rate cut. The central bank was confident enough to lower borrowing costs as inflation eased. At the same time, the economy had slowed down significantly and struggled to grow since 2023. Consequently, the rebound in April showed a rebound that led to a decline in rate cut expectations. Canada’s Gross Domestic Product increased by 0.3% in April as expected. After this report, markets lowered the likelihood of a rate cut in July from 65% to 45%. On the other hand, the US dollar fell when data revealed softer inflation in May. The core PCE price index is the Fed’s best inflation measure. It showed the annual figure easing to 2.6% in May, meeting forecasts. This is a step closer to the Fed’s 2% target and paves the way for rate cuts. As a result, traders were more confident that the Fed would cut rates starting September, raising this likelihood to 63%. However, policymakers might wait for more data to confirm this downtrend. The next major report comes on Friday, showing the state of the labor market. Economists expect fewer jobs in June than the previous month. Such an outcome would further support rate-cut expectations. USD/CAD key events today US ISM Manufacturing PMI USD/CAD technical outlook: Price retests 30-SMA after breaking below On the technical side, the USD/CAD price is challenging the 30-SMA resistance after bears pushed the price below the level. The general trend points south as the price makes lower highs and lows. At the same time, it trades within a bearish channel with clear support and resistance lines. The price recently retested the channel resistance line near the 1.3720 key level before dropping. Therefore, there is a high chance it will reach the channel support. If the price stays below the 30-SMA with the RSI under 50, bears might revisit the 1.3640 support and continue lower. https://www.forexcrunch.com/blog/2024/07/01/usd-cad-outlook-gdp-growth-keeps-canadian-dollar-firm/

2024-07-01 08:58

Elections in France put the far-right National Rally party in first position. ECB policymakers remain confident that inflation will reach the target. The US core PCE price index eased from the previous month. The EUR/USD forecast leans bullish as the euro rises after round one of the French elections. Meanwhile, the dollar was on the back foot after inflation data in the previous session raised bets for a Fed cut in September. On Sunday, elections in France put the far-right National Rally party in first position. However, the win was by a smaller margin than expected, supporting the euro. If the far right performs poorly, there will be less fear of a financial crisis. The euro has fallen in recent sessions since Macron announced a snap election that created a cloud of political uncertainty. However, after the election, the EUR/USD pair reached a two-week high before pulling back. Elsewhere, ECB policymakers remain confident that inflation will reach the central bank’s target. Consequently, the central bank will likely continue cutting interest rates. Meanwhile, the Fed is yet to start its cutting cycle. The dollar was weak after data on Friday showed weaker inflation in May. The US core PCE price index met expectations at 2.6%, easing from the previous month. This gave investors more confidence that the Fed will cut in September. However, policymakers might continue watching incoming data for more evidence that the decline to 2% will continue. Currently, markets are pricing a 63% chance that the Fed will start lowering borrowing costs in September. This might change this week after the US nonfarm payrolls report, which is due on Friday. EUR/USD key events today German Prelim CPI m/m US ISM Manufacturing PMI EUR/USD technical forecast: Bulls break range above 1.0750 On the technical side, the EUR/USD price has gapped up and broken above the 1.0750 resistance level. Moreover, the price has broken out of its consolidation area between the 1.0675 support and the 1.0750 resistance. The previous bearish move showed weakness when the price punctured the 30-SMA resistance. At the same time, the RSI made a bullish divergence, showing fading bearish momentum. Afterwards, the price entered an area of consolidation, where bulls and bears fought for control. Bulls won when the price gapped up, showing massive bullish momentum, before breaking above 1.0750. Bulls might now target the 1.0850 resistance level. https://www.forexcrunch.com/blog/2024/07/01/eur-usd-forecast-french-election-results-lift-euro/