2024-06-26 12:58

The dollar rose on Tuesday after Fed policymakers maintained a cautious tone. Fed’s Lisa Cook rate cuts would depend on incoming data. The BoJ is under a lot of pressure to raise rates due to the yen’s weakness. The USD/JPY forecast points North as a surge in the dollar puts the yen at the $160 level that triggered a BoJ intervention in April. Consequently, there is a lot of caution in the market as investors fear another intervention. The dollar rose Tuesday after Fed policymakers kept cautious and failed to provide clear guidance on the central bank’s rate-cut outlook. Fed’s Lisa Cook noted that the central bank was on track to cut rates, but it would all depend on incoming data. Therefore, she failed to provide a clear timing for the first rate cut. Policymakers remain hesitant to assume a more dovish tone as they await more data. This is to avoid making the same mistake they made last year. Although inflation had started a downtrend, it reversed, and they had to change their outlook completely. The next report that might give more evidence of the state of inflation is the PCE price index. Forecasts show further easing, which would support Fed rate cut expectations. Such an outcome would further weigh on the yen. Meanwhile, Bank of Japan policymakers have given hawkish signals in the past week, raising the possibility of a rate hike in July. The central bank is under a lot of pressure to raise rates due to the yen’s weakness. A weak currency pushes up import costs which drives inflation higher. A hike in July would have a big impact as it would coincide with plans to reduce bond purchases. USD/JPY key events today US new home sales USD/JPY technical forecast: Bulls show exhaustion at the 160.00 resistance On the technical side, the USD/JPY price has continued its rally past the 1.618 Fib extension level. Moreover, the price has stayed above the 30-SMA, showing bulls are in the lead. However, the RSI has made a bearish divergence that could lead to a reversal. The divergence indicates fading bullish momentum as the price trades near the 160.00 key resistance level. Therefore, there might be a pullback to retest the 30-SMA support. A deeper pullback would retest the 157.75 support level. However, if bulls regain momentum, the price might breach the 160.00 level to make a new high. https://www.forexcrunch.com/blog/2024/06/26/usd-jpy-forecast-dollar-surges-to-critical-160-00-level/

2024-06-26 09:49

Inflation in Australia rose at an annual rate of 4.0% in May. The likelihood of an RBA rate hike in November rose to 60%. Markets eagerly await the US PCE price index report on Friday. The AUD/USD price analysis paints a bullish picture, with the Aussie soaring on an unexpected jump in Australia’s inflation. The risks of an RBA rate hike increased. Meanwhile, the dollar was also steady after slightly hawkish Fed remarks. Data on Wednesday showed that inflation in Australia rose at an annual rate of 4.0% in May from 3.6% in the previous month. Furthermore, this was a bigger jump than the forecast of 3.8%. After the report, investors raised the chances of a Reserve Bank of Australia rate hike this year and lowered the chances of a cut. The chances of a hike in September rose slightly above 50%. At the same time, the likelihood of one in November rose to 60%. Meanwhile, investors do not expect a rate cut until late 2025. This inflation report gives the Australian dollar a stronger edge over its peers. While other major central banks begin their rate-cutting cycles, the RBA is more likely to hike. On the other hand, the dollar firmed as policymakers maintained a cautious tone despite the recent decline in inflation. Michelle Bowman and Lisa Cook kept from saying when a Fed rate cut will occur. Although there is more confidence that the US central bank will eventually cut rates, they said it would depend on incoming data. Therefore, markets eagerly await the PCE price index report on Friday. This might give more clues on the timing for rate cuts. Economists expect the report to show inflation eased to 2.6% in May, the slowest in three years. AUD/USD key events today US New Home Sales AUD/USD technical price analysis: Bulls eye range resistance amid consolidation On the technical side, the AUD/USD price has made a sharp, bullish move and has broken above the 30-SMA line. Consequently, there was a surge in bullish momentum. This can also be seen in the RSI, which trades above 50 in bullish territory. However, the price has remained in consolidation for a long time between the 0.6580 support and the 0.6700 resistance levels. Therefore, there is no clear direction in the market. Still, bulls are eyeing the 0.6700 resistance level. A break above would signal the start of a bullish trend. On the other hand, the consolidation will continue if the resistance level holds firm. https://www.forexcrunch.com/blog/2024/06/26/aud-usd-price-analysis-aussie-rallies-on-inflation-surge/

2024-06-25 12:31

The dollar fell ahead of more inflation data from the US. The euro could end the month with a 1% loss. Markets will pay attention to the presidential debate on Thursday. The EUR/USD price analysis turned bullish as the euro firmed against a weak dollar. However, the pair pulled back slightly on Tuesday as political uncertainty continued to pressure the Eurozone currency ahead of elections in France. Investors were also focused on the US presidential debate coming on Thursday. The euro got some relief on Monday as the dollar fell ahead of more inflation data from the US. However, the outlook for the currency remains clouded, with elections in France starting on Sunday. There have been concerns in the market that a new government could increase spending, worsening the already weak financial state. As a result, the euro could end the month with a 1% loss. On the other hand, elections in the US will come in November. However, markets will pay attention to the presidential debate on Thursday, which could impact the dollar. Elsewhere, investors have raised bets for a Fed rate cut in September since the May inflation figures. Furthermore, although PMI data on Friday revealed further expansion in the manufacturing and services sector, the survey also showed a decline in inflation. Therefore, price pressures are on a downtrend, which could pressure the Fed to start cutting interest rates. However, policymakers have remained cautious as they await more data to gain confidence that the downtrend will continue. Consequently, the PCE price index, which is the Fed’s preferred measure of inflation, will significantly impact the outlook for policy. Economists are projecting a decline that would boost rate-cut bets and weaken the dollar. EUR/USD key events today US CB Consumer Confidence EUR/USD technical price analysis: Channel breakout signals shift in sentiment to bullish On the technical side, the EUR/USD price has broken out of its bearish channel, indicating a possible reversal. Additionally, the price has broken above the 30-SMA, marking a shift in sentiment to bullish. At the same time, the RSI now trades in bullish territory above 50. This shift in sentiment came after the RSI made a bullish divergence with the price. This was a sign that bearish momentum was weak. Moreover, the price made a double bottom at the 1.0680 key level, showing bears could no longer make lower lows. If the price stays above the 30-SMA, it will soon revisit the 1.0800 resistance level. https://www.forexcrunch.com/blog/2024/06/25/eur-usd-price-analysis-euro-steadies-as-french-elections-loom/

2024-06-25 08:48

BoC governor Tiff Macklem said the economy could grow as inflation eases. Traders place a 72% chance of another Bank of Canada cut in July. Economists expect the US PCE index figures to show further moderation in inflation. The USD/CAD outlook leans bearish as the Canadian dollar firms after the BoC’s upbeat outlook for Canada’s economy and ahead of the inflation report. At the same time, the dollar pulled back as markets prepared for the PCE price index report coming on Friday. On Monday, the Canadian dollar surged to a three-week high after BoC governor Tiff Macklem said the economy could grow as inflation eases. He also believes the central bank will achieve a soft landing. The Bank of Canada recently started its rate-cutting cycle. Moreover, traders place a 72% chance of another cut in July. However, this likelihood might change with the CPI data coming today. Economists expect the consumer inflation report to show inflation falling to an annual rate of 2.6% in May from 2.7% in the previous month. Experts believe such an outcome would make another rate cut in July certain. The Canadian dollar also got support from increased oil prices in the previous session. The rally came amid optimism about a looming increase in demand during the summer driving season. On the other hand, the US dollar fell as investors awaited more data for clues on the Fed’s policy outlook. This week’s main focus is the PCE price index report. Economists expect the figures to show further moderation in inflation, which might increase Fed rate cut expectations. USD/CAD key events today Canada’s Consumer Price Index m/m Canada’s median Consumer Price Index y/y Canada’s trimmed Consumer Price Index y/y US CB Consumer Confidence USD/CAD technical outlook: Bears find footing below 1.3680 On the technical side, the USD/CAD price has broken below the 1.3680 key support level. At the same time, it has pushed well below the 30-SMA, with the RSI nearing the oversold region. Consequently, the bearish bias has strengthened. However, the price has reached the 0.786 Fib level which might act as support. If this happens, the price might return to retest the recently broken 1.3680 level. However, since the bearish bias is strong, there is a high chance the downtrend will continue with the next target at 1.3605. https://www.forexcrunch.com/blog/2024/06/25/usd-cad-outlook-bocs-economic-optimism-drives-cad-higher/

2024-06-24 13:25

Economists believe a rate cut in the UK is nearing. UK sales rose 2.9% in May after a 1.8% fall in April. Market participants are awaiting the US PCE price index report. The GBP/USD outlook is bearish despite a slight recovery in the pound after upbeat retail sales data. The currency remains near recent lows amid an increase in expectations for a Bank of England rate cut. Meanwhile, the dollar pulled back slightly on Monday as traders geared up for more US inflation data. After Thursday’s Bank of England meeting, economists believe a rate cut in the UK is nearing. The central bank held rates, but policymakers were more comfortable with the idea of cutting rates. As a result, the pound fell after the meeting. However, this move reversed slightly on Friday after the UK retail sales report. Notably, sales rose by 2.9% in May after a 1.8% fall in April. Moreover, this was much bigger than economists’ expectations of a 1.5% increase. This increase in consumer spending shows high demand that challenged the outlook for rate cuts. Meanwhile, the US dollar surged last week after a rate cut by the Swiss National Bank highlighted the delay in Fed rate cuts. However, rate cut expectations remained mostly stable after softer-than-expected inflation readings for May. On Friday, the US released PMI data showing the level of business activity in the economy. Notably, the manufacturing and services sectors expanded more than expected, leading to a rally in the dollar. Market participants are now awaiting the US PCE price index report, which will be released on Friday. Economists expect the annual figure to slow to 2.6%. GBP/USD key events today Investors do not expect any major reports from the UK or the US. Therefore, the pair might consolidate. GBP/USD technical outlook: Temporary rebound meets trendline resistance On the technical side, the GBP/USD price is rebounding after making a new low. However, the bearish bias remains intact because the price trades below the 30-SMA with the RSI in bearish territory below 50. Therefore, the rebound might only be temporary before the downtrend continues. The price is currently facing its resistance trendline and might stop and reverse lower. However, if it breaks above, more resistance will be at the 30-SMA line and the 1.2700 level. When bears resume the downtrend, they will target the 1.2600 psychological level. https://www.forexcrunch.com/blog/2024/06/24/gbp-usd-outlook-minor-gains-amid-positive-uk-retail-data/

2024-06-24 08:52

The yen has lost 1.4% of its value against the dollar in June. The Bank of Japan has held back from further rate hikes due to poor economic demand. Investors are gearing up for the US PCE price index report on Friday. The USD/JPY forecast reveals a surge in bullish momentum as the yen hovers near $160.00, raising concerns about a possible intervention. Meanwhile, the dollar was steady as investors prepared to receive more US inflation data this week. The yen has lost 1.4% of its value against the dollar in June. This decline came mostly from the dovish Bank of Japan policy meeting. At the June meeting, the central bank failed to reduce its bond purchases. At the same time, the currency has remained weak due to the gap in interest rates between Japan and the US. Consequently, it trades near $160.00, a line in the sand for Japanese authorities. This level led to interventions in April and May. Notably, the Bank of Japan has held back from further rate hikes due to poor economic consumption, which has kept inflation low. On the other hand, the Federal Reserve has delayed rate cuts. Moreover, it might only cut once this year in December. This means that the wide gap in rates between Japan and the US has remained, increasing demand for the dollar at the expense of the yen. Meanwhile, the US dollar was steady after Friday’s data showed a bigger-than-expected expansion in the manufacturing and services sectors. Investors are now gearing up for the PCE price index report on Friday, which will give more clues on the Fed’s policy outlook. USD/JPY key events today Neither the US nor Japan will release any high-impact report today. Therefore, trading might be thin. USD/JPY technical forecast: Bulls face solid resistance zone On the technical side, the USD/JPY price has surged to the 1.618 Fib extension level. Moreover, the bullish bias is strong because the price sits well above the 30-SMA with the RSI in the overbought region. However, this bullish move has reached a solid resistance zone comprising the 1.618 Fib and the 160.01 level. Therefore, there is a high chance that bears will emerge and push the price lower. Such an outcome could lead to a retest of the 30-SMA or the bullish trendline. However, if bulls remain strong, the price will breach this zone, seeking new highs. https://www.forexcrunch.com/blog/2024/06/24/usd-jpy-forecast-sparking-intervention-worries-near-160-00/