2024-06-19 10:17
UK inflation fell to the 2% BoE target for the first time in almost three years. UK services price inflation increased by 5.7%, more significant than the forecast 5.5%. US data on Tuesday showed soft retail sales in May. The GBP/USD forecast shows a surge in bullish momentum after data from the UK showed that underlying inflation remains strong. Meanwhile, data in the previous session revealed a smaller-than-expected increase in US retail sales. Data on Wednesday showed that UK inflation fell to the 2% BoE target for the first time in almost three years. However, underlying price pressures remained strong, with service price inflation increasing by 5.7%, which was more significant than the forecast of 5.5%. Consequently, the Bank of England might hesitate to lower borrowing costs. While economists expect the BoE to start cutting rates in August, markets have lowered the likelihood of such an outcome from 50% before the report to 30%. At the same time, they now expect 44 basis points of cuts this year, down from 50. The shift to a less dovish outlook helped boost the pound on Wednesday. Meanwhile, the dollar was on the back foot after US data on Tuesday showed soft retail sales in May. Economists had expected a more significant increase in sales for the month. The miss indicated weaker consumer spending and demand. As the US consumer reduces spending, the economy suffers, and inflation declines. As a result, investors believe the Fed has more reading to cut borrowing costs. For this reason, there is a 67% chance that the central bank will cut rates in September. GBP/USD key events today Investors will keep digesting inflation data as they await tomorrow’s Bank of England policy meeting. GBP/USD technical forecast: Rebound meets strong SMA and Fib resistance On the technical side, the GBP/USD price moved sharply from the 1.2700 key level to the 30-SMA resistance. However, the bias has yet to shift from bearish to bullish since the price is still testing the SMA resistance and the 0.382 Fib level. Nevertheless, bulls have gained momentum, as seen in the RSI, which has reached above 50. Therefore, they may breach the SMA to retest the 1.2850 resistance level. However, there is a higher chance the SMA and the Fib level will hold firm, allowing bears to return and target the 1.2600 level. https://www.forexcrunch.com/blog/2024/06/19/gbp-usd-forecast-strong-underlying-inflation-boosts-sterling/
2024-06-19 09:44
US sales only increased by 0.1% in May compared to expectations of a 0.3% increase. Markets are pricing in a 67% chance of a Fed cut in September. Economists expect the ECB to cut rates twice more this year. The EUR/USD price analysis shows a slow rebound as the dollar remains fragile after weaker-than-expected retail sales figures. Meanwhile, the euro remained vulnerable amid political uncertainty and policy divergence between the ECB and the Fed. The greenback fell on Tuesday after US retail sales data showed weaker-than-expected consumer spending in May. Sales only increased by 0.1% in May compared to expectations of a 0.3% increase. Moreover, data for the previous month was revised from a reading of 0.0% to -0.2%, indicating a slowdown in the economy. Markets are pricing in a 67% chance that the Fed will lower borrowing costs in September. Furthermore, they expect at least 50 basis points of rate cuts from the Fed this year. However, policymakers have maintained a different view, projecting only one cut in December. This hawkish outlook has helped keep the dollar strong despite poor economic data. Moreover, it has raised the chances of a policy divergence with the European Central Bank. According to a Reuters poll, economists expect the ECB to cut rates twice more this year, in September and December. However, they also caution that there is a higher risk of fewer cuts. Policymakers have grown more cautious, with Philip Lane noting there was no urgency to cut rates if the economy remains robust. Meanwhile, Lagarde said the central bank will depend on economic data for future policy decisions. At the same time, investors continued to worry about the situation in France after the snap election announcement. EUR/USD key events today Investors do not expect any key events from the US or the Eurozone today. Consequently, the price might consolidate. EUR/USD technical price analysis: Decline pauses as bulls challenge the 30-SMA On the technical side, the EUR/USD price has risen above the 1.0725 level to retest the 30-SMA resistance. Despite this bullish move, the bias remains bearish as the price makes lower highs and lows. Furthermore, it trades in a bearish channel and currently sits nearer the channel resistance. Therefore, there is a chance that the bullish move will continue past the SMA to retest the channel resistance before bouncing lower. A continuation of the downtrend will allow bears to retest the 1.0650 level. https://www.forexcrunch.com/blog/2024/06/19/eur-usd-price-analysis-weak-retail-sales-weigh-on-dollar/
2024-06-18 13:43
US retail sales data on Tuesday revealed a smaller-than-expected increase. The Fed has projected only one cut this year. The pound fell ahead of the Bank of England policy meeting. The GBP/USD price analysis pointed south despite a decline in the dollar after retail sales missed forecasts. The pound remained weak as investors prepared for the Bank of England policy meeting later in the week. US retail sales data on Tuesday revealed a smaller-than-expected increase, showing consumer spending was not as great as expected in May. Moreover, figures for April were revised lower, indicating a slowdown in the economy. Retail sales increased by 0.1% in May after falling 0.2% in the previous month. This was in line with recent US data that has revealed weaker demand in the economy and cooler inflation. All this indicates a higher likelihood of the Fed implementing two rate cuts this year. However, the Fed has projected only one cut this year, which has led to some confusion in the markets. If data continues showing weak economic activity, the Fed might be forced to cut rates earlier than December. Meanwhile, the pound fell ahead of the Bank of England policy meeting, where the central bank will likely keep rates unchanged. At the same time, policymakers might hint at the possible timing of the first rate cut. Investors are also gearing up for the UK CPI report coming on Wednesday, which will likely guide markets on the outlook for cuts in the UK. Economists believe inflation rose by 2.0% in May after a 2.3% increase in April. GBP/USD key events today Investors will keep digesting the US retail sales report as there are no more key events for the day. GBP/USD technical price analysis: Bears find footing below 1.2700 On the technical side, the GBP/USD price has broken below the 1.2700 support, retested it, and is now moving lower. This is a big step for bears because the price has tried and failed to break below this support level for a long time. This break allows the price to trend lower and target the 1.2600 support level. The price trades well below the 30-SMA, and the RSI is below 50 in bearish territory, supporting the bearish bias. This bias will continue if the price trades below the 30-SMA, and the price might continue below the 1.2600 support. https://www.forexcrunch.com/blog/2024/06/18/gbp-usd-price-analysis-downbeat-us-retail-sales-boosts-pound/
2024-06-18 10:37
The Reserve Bank of Australia held rates at 4.35% on Tuesday. Australia’s inflation is at 3.6%, well above the central bank’s target. Economists expect the US retail sales figure to come in at 0.3%. The AUD/USD outlook is slightly bullish as the Aussie edges up after the Reserve Bank of Australia policy meeting. Meanwhile, the dollar remained steady as investors waited for the US retail sales report to provide more clues on the state of the economy. The Reserve Bank of Australia held rates at 4.35% on Tuesday but discussed the possibility of hiking interest rates. Australia’s inflation is at 3.6%, well above the central bank’s target. Therefore, the RBA has remained cautious, and markets expect it to be among the last central banks to start cutting interest rates. RBA Governor Bullock said recent data had raised fears that inflation remained high. After the decision, the Aussie rose slightly before reversing. At the same time, bets for an RBA cut in December fell from 65% to 44%. Meanwhile, the US dollar was steady as investors waited for the US retail sales report, which will show the state of consumer spending. Economists expect the figure to come in at 0.3%, higher than the previous month’s 0.0%. If this is the case, it will indicate an increase in consumer spending, likely boosting the dollar. At the same time, market participants await speeches from several Fed officials that will give clues on the outlook for rate cuts. Last week, Fed rate cut expectations fluctuated as the data showed easing inflation while the Fed maintained a cautious outlook, projecting only one rate cut this year. AUD/USD key events today US core retail sales US retail sales AUD/USD technical outlook: Price nears 0.6580 range support. On the technical side, the AUD/USD price is consolidating between the 0.6580 support and the 0.6701 resistance levels. Bears are in the lead within this range area because the price trades below the 30-SMA. At the same time, the RSI is below 50, in bearish territory. Moreover, the price is closer to the range support than the range resistance. Currently, bulls are testing the 30-SMA resistance but have made a large wick, indicating rejection. Therefore, there is a high chance the price will fall to retest the range support. A break below this level would allow the price to start trending lower. https://www.forexcrunch.com/blog/2024/06/18/aud-usd-outlook-aussie-gains-following-rba-policy-meeting/
2024-06-17 11:58
The euro remained weak due to fears of a financial crisis in France. The loonie strengthened on Friday as data revealed a 1.1% increase in factory sales. Expectations for BoC cuts have fallen since the Fed’s slightly hawkish policy meeting. The USD/CAD outlook shows bullish momentum on Monday as the dollar rises amid political uncertainty in the Eurozone. Meanwhile, the Canadian dollar retreated from Friday’s highs when data showed a robust Canadian economy. The greenback started the week positively as the euro remained weak due to fears of a financial crisis in France. The recent announcement of a snap election means a change in leadership in the country that could worsen its financial state. Consequently, French markets sold off last week, bringing back memories of the UK budget crisis. Meanwhile, the Euro fell to an over-one-month low last week, especially since the ECB showed no signs that it would support French markets. The euro’s decline has boosted the dollar as it makes up 57% of the dollar index. Meanwhile, the Canadian dollar gave up some of the gains it made last week due to a strong dollar. The loonie strengthened on Friday as data revealed a 1.1% increase in factory sales in April. At the same time, wholesale trade rose by 2.4% in April. Furthermore, USD/CAD traders have already priced in the Bank of Canada’s cuts this year. This means that any talk on rate cuts will have little impact on the pair. Last week, the Bank of Canada became the first major central bank to cut interest rates. However, expectations for cuts have fallen since the Fed’s slightly hawkish policy meeting. USD/CAD key events today Empire State Manufacturing Index USD/CAD technical outlook: Bulls challenge 30-SMA On the technical side, the USD/CAD price is on the verge of breaking above the 30-SMA to retest the 1.3780 resistance level. At the same time, the RSI has gone slightly above 50 into bullish territory. Consequently, there is a chance the price will breach the SMA. If this happens, bulls might challenge the 1.3780 resistance level, seeking a new high. However, bears have also shown strength with a bearish engulfing candle. If this strength continues, the price might fail to go above the SMA. This could mean a drop to the bullish trendline or the 1.3700 support level. https://www.forexcrunch.com/blog/2024/06/17/usd-cad-outlook-dollar-climbs-amid-eurozone-political-turmoil/
2024-06-17 09:13
The announcement of a snap election in France has caused considerable turmoil in the Eurozone. The ECB has remained quiet about supporting French markets. Markets are still absorbing Fed forecasts for one rate cut this year. The EUR/USD forecast points to a bearish trend as the euro lingers near a recent low reached last week due to political uncertainty in the Eurozone. At the same time, investors were waiting for more data this week to give clues on the outlook for Fed rate cuts. The announcement of a snap election in France has caused considerable turmoil in the Eurozone. Investors are concerned that a new government would worsen the country’s financial state. This has weighed on the euro and boosted the US dollar. At the same time, the ECB has remained quiet about supporting French markets, which have sold off since the announcement. This uncertainty will likely keep the euro on the back foot for some time. On the other hand, the dollar has remained strong as safe-haven demand rises with the uncertainty in the Eurozone. Moreover, markets are still absorbing Fed forecasts for one rate cut this year in December. Notably, on Sunday, Fed’s Neel Kashkari supported this outlook, saying it was reasonable to cut rates once. This has reversed moves after softer-than-expected US inflation. Nevertheless, market participants are pricing in the possibility of a rate cut in September since the economy is showing signs of slowing down. A survey on Friday showed a significant decline in US consumer sentiment amid inflation concerns. Meanwhile, another report showed a decrease in US import prices, supporting the view that inflation is easing. Traders are awaiting data on retail sales and flash PMIs later this week. EUR/USD key events today Empire State manufacturing index EUR/USD technical forecast: Price trends downward after consolidation On the technical side, the EUR/USD price is in a bearish trend after breaking out of its consolidation area. Previously, it had been caught between the 1.0800 support and the 1.0900 resistance level. However, when bulls tried to break out of the range, they failed and the RSI made a bearish divergence, indicating weaker bullish momentum. After this, bears took over with enough strength to break below the 1.0800 range support. Currently, the price is trading in a new bearish channel. Furthermore, bears recently broke below the 1.0725 critical level, a sign that the price could continue lower. https://www.forexcrunch.com/blog/2024/06/17/eur-usd-forecast-sellers-regain-amid-political-uncertainty/
