2024-06-30 08:01

The yen reached a new 38-year low and raised intervention concerns. An increase in Tokyo’s inflation increased the chances of a BoJ hike in July. The US core PCE index was softer, confirming the recent decline in price pressures. The USD/JPY weekly forecast is bullish as the interest rate differential between Japan and the US weighs on the yen. Ups and downs of USD/JPY USD/JPY had a bullish week, with the yen reaching a new 38-year low and raising intervention concerns. The decline in the yen last week came as investors focused on the gap in rates between the US and Japan. Therefore, there was little focus on economic data, which resulted in many warnings from Japanese authorities. Data showed an increase in Tokyo’s inflation, which increased the chances of a BoJ hike in July. Meanwhile, in the US, the core PCE index came in softer, confirming the recent decline in price pressures. Consequently, bets for a Fed cut in September rose. However, none of these reports could stop the yen’s plunge. Next week’s key events for USD/JPY Next week, investors will focus on US data, such as nonfarm payrolls and the manufacturing PMI. They will also pay attention to Powell’s speech and the FOMC minutes for clues on the Fed’s policy outlook. At the last Fed meeting, policymakers assumed a slightly hawkish tone, forecasting just one rate cut this year. However, traders have maintained a more dovish outlook for two cuts this year due to softer inflation figures. Therefore, they will pay close attention to Powell’s speech to see whether his tone will change. Meanwhile, the employment report will shape expectations for rate cuts. A bigger-than-expected number would lower expectations for rate cuts. On the other hand, a smaller-than-expected figure would increase bets for the first cut in September. USD/JPY weekly forecast: Price exceeds 160.00 resistance to set a new high On the technical side, the USD/JPY price recently broke above the 160.00 key resistance level to make a new high in the bullish trend. The price has consistently risen with higher lows and highs, indicating a solid uptrend. Moreover, it has mostly stayed above the 22-SMA with the RSI above 50, supporting solid bullish momentum. However, with the recent new high, bulls have grown weaker. The RSI has made a bearish divergence with the price, a sign of exhaustion in the bullish move. If this divergence plays out, the price might revisit the support trendline before either breaking below or rising higher. https://www.forexcrunch.com/blog/2024/06/30/usd-jpy-weekly-forecast-japan-us-rate-gap-weighs-on-yen/

2024-06-29 10:01

The EUR/USD weekly forecast was overshadowed as the US economy expanded at a bigger 1.4% rate in Q1. The US core PCE report showed softer inflation. Next week’s primary focus will be the US monthly employment report. The EUR/USD weekly forecast shows more upside potential as Fed rate cut expectations rise with softer inflation data. Ups and downs of EUR/USD EUR/USD had a slightly bullish week, during which the dollar fell. However, it was a slow week since there were few significant reports from the US. Since the week started, the main focus has been the core PCE price index. Other reports during the week included the US GDP, consumer confidence, and unemployment claims. The US economy expanded at a bigger 1.4% rate in Q1. Meanwhile, although consumer confidence fell, it came in higher than expected. The unemployment claims fell slightly, indicating strength in the labor market. Finally, the core PCE report aligned with expectations, showing softer inflation. As a result, expectations for a cut in September increased, weighing on the dollar. Next week’s key events for EUR/USD Next week, the US will release significant reports, including manufacturing business activity, FOMC meeting minutes, and nonfarm payrolls. At the same time, Fed Chair Powell will speak on Tuesday. Meanwhile, in the Eurozone, investors will review the ECB meeting minutes. Next week’s primary focus will be the US monthly employment report, which will show the state of the labor market. Although inflation has eased in recent months, employment has remained robust. As a result, policymakers have remained cautious about rate cuts. For June, economists expect 180,000 additional jobs. This would be a drop from the previous 272,000 and would pave the way for rate cuts. Furthermore, the ECB and Fed minutes will provide clues on the rate cut outlooks for the US and the Eurozone. EUR/USD weekly technical forecast: Price retests trendline and 1.0700 support On the technical side, the EUR/USD price recently broke above its resistance trendline. However, the move paused at the 1.0900 key resistance level before pulling back. The price has fallen below the 22-SMA to retest the recently broken trendline and the 1.0700 key support level. Therefore, EUR/USD is currently in a strong support zone. If this support holds firm, the price will bounce higher to retest the 1.0700 resistance level. A break above this level would confirm the start of a bullish trend with a higher high. https://www.forexcrunch.com/blog/2024/06/29/eur-usd-weekly-forecast-softer-inflation-fuels-fed-cut-bets/

2024-06-28 11:12

The dollar has risen since the start of the year due to a decline in Fed rate cut expectations. The US economy expanded at a 1.4% rate in the first quarter. Tokyo’s core CPI rose 2.1% in June after last month’s 1.9% increase. The USD/JPY price analysis is bullish as the dollar trades at a 38-year high against the yen ahead of US inflation data. Investors fear a possible intervention as the yen trades at its weakest level since 1986. The dollar has risen since the start of the year due to a decline in Fed rate cut expectations. Currently, it is heading for its second quarter of gains, with the Fed forecasting just one rate cut this year. Meanwhile, investors are expecting at least two. Nevertheless, the outlook will largely depend on incoming data. Notably, data on Thursday showed the US economy expanded at a 1.4% rate in the first quarter, an increase from the previous 1.3% increase. At the same time, unemployment claims dropped last week from 239K to 233K, indicating labor market strength. Markets are now awaiting the PCE report, which might show inflation easing to 2.6% in May. Lower inflation would raise bets for rate cuts and weaken the dollar. This would give the yen some relief after its recent plunge. Meanwhile, core inflation in Japan’s capital, Tokyo, increased in June as a weak yen drove import costs higher. The core CPI rose by 2.1% after last month’s 1.9% increase. Furthermore, data revealed an increase of 2.8% in Japan’s factory output in May. This was a more significant number than the forecast of 2.0%. These reports increased the chances that the Bank of Japan will cut rates in July. Still, this was not enough to stem the yen’s decline. USD/JPY key events US Core PCE Price Index USD/JPY technical price analysis: Bulls eying 162.01 after breaching the 160.00 resistance On the technical side, the USD/JPY price is on a solid bullish trend that recently broke above the 160.00 critical resistance level. Moreover, the price sits above the 30-SMA, and the RSI is going in and out of the overbought region, showing solid bullish momentum. Furthermore, the uptrend is making such short pullbacks, a sign that bulls are much stronger than bears. Currently, the price has paused and is pulling back. It might retest the 30-SMA support before continuing higher. The next major resistance is at the 16.01 level. https://www.forexcrunch.com/blog/2024/06/28/usd-jpy-price-analysis-testing-38-year-top-ahead-of-us-pce/

2024-06-28 09:11

The greenback is heading for a second quarter of gains due to a drop in Fed rate cut expectations. Market participants will pay close attention to the PCE price index report. The US GDP rose from 1.3% to 1.4%, as expected. The GBP/USD outlook remains bearish, even with a slight rebound, as investors eagerly await the US PCE price index report. At the same time, the dollar was steady after rising due to data showing continued strength in the US economy. The greenback is heading for a second quarter of gains due to a drop in Fed rate cut expectations. Markets have had to readjust expectations for rate cuts since the year began. Currently, investors expect two cuts for the year. However, the Fed has a less dovish outlook, forecasting just one rate cut. Consequently, market participants will pay close attention to the PCE price index report later in the day. Economists expect inflation to soften to an annual rate of 2.6% in May. If the figures match these estimates, Fed rate cut expectations will increase. On the other hand, a bigger-than-expected number would reduce rate cut expectations. Furthermore, the dollar got a boost from the previous session’s data. The GDP rose from 1.3% to 1.4%, as expected. Meanwhile, unemployment claims fell from 239,000 to 233,000, showing continued strength in the US labor market. On Thursday, a former MPC member said the Bank of England could cut rates in August. However, it would depend on whether inflation and wage data align with MPC forecasts. Last week, the central bank held rates despite inflation reaching the 2% target. Policymakers are waiting for weaker wage data before starting the rate-cutting cycle. GBP/USD key events today US core PCE price index m/m GBP/USD technical outlook: Downtrend approaches 1.2600 support On the technical side, the GBP/USD price trades below the 30-SMA with the RSI below 50, showing a bearish trend. Moreover, the price is making lower highs and lows, indicating a developed downtrend. Currently, the price trades with the nearest support at 1.2600 and the nearest resistance at 1.2700. Moreover, the decline has paused, and bulls are challenging the 30-SMA resistance. A break above the SMA would allow the price to retest the 1.2700 resistance. However, if the SMA holds firm, the price will continue the downtrend with the next target at 1.2600. https://www.forexcrunch.com/blog/2024/06/28/gbp-usd-outlook-no-respite-as-us-pce-looms/

2024-06-27 10:21

On Wednesday, the yen plunged to a 38-year low. Investors remained cautious ahead of the French elections. Policymakers remain confident that Eurozone inflation will reach the 2% target. The EUR/USD outlook is bearish as the dollar holds near recent peaks driven by a decline in the yen. Meanwhile, ECB policymakers and experts increased market confidence that Eurozone inflation will reach the central bank’s target. On Wednesday, the yen plunged to a 38-year low as investors focused on the interest rate differential between the US and Japan. This allowed the dollar to strengthen against its peers. This rally came ahead of GDP and inflation data from the US that might give more clues on the Fed’s rate cut outlook. The PCE price index report, due on Friday, will significantly shape the outlook for Fed interest rates. If inflation eases as expected, rate-cut bets will increase, and the dollar might pull back. Moreover, investors might assume a more dovish tone with more confidence in the inflation downtrend. On the other hand, investors remained cautious ahead of the French elections. Political uncertainty since Macron’s snap election announcement has weighed on the euro. A radical shift in the government could mean fiscal policy changes that might cause a financial crisis. That risk will remain until the elections are done. Meanwhile, policymakers remain confident that Eurozone inflation will reach the 2% target. ECB’s Olli Rehn said on Wednesday that data showed inflation would reach the central bank’s target. At the same time, experts are planning to advise the ECB to continue cutting rates, which would weaken the euro. Markets currently price 68bps of ECB rate cuts this year. EUR/USD key events today US final GDP q/q US jobless claims EUR/USD technical outlook: Price reaches 1.0680 level for the third retest On the technical side, the EUR/USD price has fallen to retest the 1.0680 support level a third time. At the same time, it has pulled back to retest the recently broken channel resistance line. Moreover, the price is back below the 30-SMA with the RSI in bearish territory, supporting a bearish bias. However, the RSI still shows a bullish divergence that could lead to a bullish reversal. The RSI divergence indicates weaker bearish momentum, meaning the price might fail to break below 1.0680. If this happens, bulls might break above the SMA to target the 1.0800 resistance level. https://www.forexcrunch.com/blog/2024/06/27/eur-usd-outlook-dollar-remains-strong-amid-yens-decline/

2024-06-27 08:39

The Canadian dollar has fallen since Tuesday despite an unexpected jump in Canada’s inflation. Canada’s inflation rose at an annual rate of 2.9% in May. The greenback strengthened Wednesday as the yen fell to a new 38-year low. The USD/CAD forecast shows slight bearish momentum as the Canadian dollar recovers from its recent slump amid a drop in BoC rate cut bets. However, the bullish trend remains, with the dollar rallying against most currencies due to a decline in the yen. The Canadian dollar has fallen since Tuesday despite an unexpected jump in Canada’s inflation. It is a sign that investors are more focused on the dollar, which is on the rise. Notably, data on Tuesday showed that Canada’s inflation rose at an annual rate of 2.9% in May. It was a much bigger-than-expected jump from the previous month’s 2.7%, leading to a decline in rate cut expectations. Bank of Canada policymakers were quite confident about the downtrend in price pressures when they cut rates for the first time in June. Therefore, investors had high expectations that the central bank would cut again in July. However, after the inflation numbers, these expectations have fallen. This should have given the Canadian dollar a big boost. However, dollar strength overshadowed Canada’s inflation surprise. The greenback strengthened Wednesday as the yen fell to a new 38-year low. The catalyst behind this move is the wide gap in interest rates between Japan and the US. This has increased demand for the dollar compared to the yen, which weighs on other currencies like the Canadian dollar. The dollar rose despite poor housing data showing a drop in new home sales in the US. Investors are now awaiting GDP data and the PCE price index report. USD/CAD key events today US final GDP q/q US unemployment claims USD/CAD technical forecast: Price pauses at 0.786 Fib and reverses On the technical side, the USD/CAD price failed to close below the 0.786 Fib retracement level. Instead, it made a large wick before reversing and breaking above the 1.3680 key level and the 30-SMA. The break above the SMA indicates a shift in sentiment to bullish. Currently, the price is pulling back to retest the recently broken levels. However, since it remains above the 30-SMA with the RSI over 50, there is a high chance the bullish move will resume. Consequently, USD/CAD might revisit the 1.3780 key resistance level. https://www.forexcrunch.com/blog/2024/06/27/usd-cad-forecast-falling-boc-rate-cut-bets-boost-cad/