2024-06-16 08:00
US consumer and wholesale inflation figures came in below estimates. The Fed forecast only one rate cut this year. The Reserve Bank of Australia will hold its policy meeting next week. The AUD/USD weekly forecast is slightly bearish as the dollar recovers on the Fed’s outlook for one rate cut in 2024. Ups and downs of AUD/USD The Aussie ended on a bullish candle but closed well below its highs as the dollar rallied towards the end of the week. During the week, investors focused on consumer and wholesale inflation figures, which came in below estimates. Consequently, there was more confidence that the Fed would cut rates twice this year. However, the Fed had a more hawkish outlook, with policymakers noting that the economy remained strong. As a result, the central bank forecast only one rate cut this year. Therefore, although the dollar started the week down, it ended strong, leading to a decline in the AUD/USD price. Next week’s key events for AUD/USD Next week, the Reserve Bank of Australia will hold its policy meeting, probably keeping interest rates unchanged. Furthermore, investors will focus on the US retail sales report, which will show the state of consumer spending in the country. The RBA is widely expected to maintain rates. However, the market focus will be on the messaging after the meeting, which might indicate when the central bank will start cutting interest rates. Futures currently show a lower than 50% likelihood of a cut in December. Meanwhile, the US retail sales report will likely show no growth during the month, increasing policymakers’ confidence that the economy is slowing down. AUD/USD weekly technical forecast: Price fluctuates within 0.6580 support and 0.6701 resistance On the technical side, the AUD/USD price is caught in a range between the 0.6580 support and the 0.6701 resistance levels. However, bears show more strength within the range, with bigger candles than bulls. Moreover, the price sits below the 22-SMA, a sign that bears are in the lead. The RSI has also crossed below 50, supporting bearish momentum. Therefore, there is a high chance that the price will break below the 0.6580 range support. If this happens, it might collapse further to retest the 0.6401 support level. The price will confirm a downtrend when it starts making lower highs and lows. https://www.forexcrunch.com/blog/2024/06/16/aud-usd-weekly-forecast-fed-signals-one-rate-cut-for-2024/
2024-06-15 08:19
UK data revealed a significant jump in monthly unemployment claims. US data revealed a smaller-than-expected figure for consumer inflation in May. Fed forecasts at the FOMC meeting showed only one rate cut in December. The GBP/USD weekly forecast shows more downside potential as Fed forecasts for rate cuts overshadow the recent cooler inflation figures. Ups and downs of GBP/USD The pound had a bearish week amid a range of economic reports from the US and the UK. At the start of the week, UK data revealed a significant jump in monthly unemployment claims, showing a decline in the labor market that weighed on the pound. However, the move later reversed when US data revealed a smaller-than-expected figure for consumer inflation in May. Investors raised bets for a Fed rate cut in September, pushing the dollar lower. Unfortunately, Fed forecasts at the FOMC meeting showed only one rate cut in December, which helped the dollar recover as the week ended. This recovery continued despite softer-than-expected wholesale inflation data. Next week’s key events for GBP/USD Next week, the UK will release several major reports, including the CPI, retail sales, and manufacturing PMI. At the same time, investors will pay attention to Thursday’s Bank of England policy meeting. Meanwhile, the US will only release its retail sales report. The UK consumer inflation report will significantly shape the outlook for interest rates. Inflation in the country has been on a downtrend and is currently at 2.3%, near the central bank’s target. However, in the last report, economists had expected it to reach 2.1%. Another bigger-than-expected figure would lower bets for a cut in August. Meanwhile, the Bank of England will likely maintain rates at its policy meeting. GBP/USD weekly technical forecast: Break below 22-SMA triggers shift in sentiment On the technical side, the GBP/USD price has broken below the 22-SMA after failing to breach the 1.2800 critical resistance level. At the same time, the RSI has broken below 50, signaling a shift in sentiment to bearish. The previous bullish move paused at 1.2800, and bears started showing strength with large candles. The shift in sentiment will allow them to revisit the 1.2600 support level. If bears can break below this level to start making lower highs and lows, they will confirm a new downtrend. Moreover, the decline might continue to the 1.2400 key level. https://www.forexcrunch.com/blog/2024/06/15/gbp-usd-weekly-forecast-fed-rate-forecasts-pushes-dollar-up/
2024-06-14 09:55
Last week, the Bank of Canada became the first G7 central bank to cut interest rates. Investors are pricing in a 55% chance that the Bank of Canada will cut rates in July. Safe-haven demand for the dollar increased with the recent snap election announcement in France. The USD/CAD price analysis indicates a bullish trend as the Canadian dollar depreciates following the BoC’s reaffirmation of its intention to cut rates. The loonie was also weighed down by a stronger dollar, which rose on safe-haven demand. Notably, the Bank of Canada became the first G7 central bank to cut interest rates last week, weakening the Canadian dollar. Moreover, on Thursday, Bank of Canada Deputy Governor Sharon Kozicki signaled more rate cuts if inflation continues to ease. However, she noted that policy decisions will heavily rely on incoming data. Currently, investors are pricing in a 55% chance that the Bank of Canada will cut rates in July. Meanwhile, the dollar was on the front foot on Friday as safe-haven demand increased with the recent announcement of a snap election in France. At the same time, investors were still digesting the Fed’s forecast for only one rate cut in December despite cooling inflation. Fed policymakers sounded more hawkish than expected on Wednesday, emphasizing the need for patience with rate cuts. Fed Chair Powell noted that the US economy remains robust despite lower inflation, a more hawkish assessment than the market had expected after the softer consumer inflation figures. However, investors are holding on to bets that there will be two rate cuts this year. Notably, unemployment claims rose last week, and wholesale inflation fell more than expected. USD/CAD key events today Prelim UoM consumer sentiment USD/CAD technical price analysis: Bulls eye 1.3780 resistance On the technical side, the USD/CAD price has broken above the 30-SMA and is approaching the 1.3780 resistance level. At the same time, the RSI has broken above 50 and now supports solid bullish momentum. This move comes after the price met a solid barrier at 1.3780 and pulled back to retest the recently broken channel resistance and the 1.3700 level. After the pullback, bulls will be looking for a new high. This means the price might soon challenge the 1.3780 resistance level. A break above this level would strengthen the bullish bias and confirm a bullish trend with a higher high. https://www.forexcrunch.com/blog/2024/06/14/usd-cad-price-analysis-bocs-rate-cut-plan-weighs-on-loonie/
2024-06-14 08:37
The USD/JPY outlook weakens as BoJ said it would continue buying government bonds at the current rate. The dollar was strong due to safe-haven inflows from the Eurozone. The US Producer Price Index report showed softer-than-expected wholesale inflation. The USD/JPY outlook remains optimistic as the yen hovers close to a one-month low after the Bank of Japan’s surprisingly dovish stance. At the same time, the dollar was firm as investors sought safety amid political uncertainty in the Eurozone. The Bank of Japan kept rates unchanged on Friday and said it would continue buying government bonds at the current rate. Meanwhile, market participants had expected the central bank to announce a reduction in its bond purchases. The central bank, however, said it plans to trim these purchases next month. Consequently, the yen and Japanese bond yields plunged. Furthermore, investors expect the BoJ to raise rates sometime this year. However, there is uncertainty about the timing, given that recent data shows weak consumption in the country. Elsewhere, the dollar was strong due to safe-haven inflows from the Eurozone. Investors have been worried since French President Emmanuel Macron announced a snap election. This led to political uncertainty, which drove traders away from risky assets. Meanwhile, economic data throughout the week reinforced expectations that the Fed will cut rates in September. Notably, on Thursday, data revealed more cracks in the US labor market, with unemployment claims increasing from 229,000 to 242,000 in the previous week. At the same time, the Producer Price Index report showed softer-than-expected wholesale inflation, which will likely put more pressure on the Fed to cut interest rates. The PPI fell from 0.5% in the previous month to -0.2 % in May. This came after the consumer inflation report revealed a lower-than-expected figure. Although the Fed was cautious at the policy meeting, investors expect at least two rate cuts in 2024. USD/JPY key events today Prelim UoM consumer sentiment USD/JPY technical outlook: Bulls surpass 157.50 resistance On the technical side, the USD/JPY price has broken above the 157.50 resistance level to make a higher high. This has put the price well above the 30-SMA, and the RSI is nearer the overbought region, which supports a solid bullish bias. At the same time, the price is trading in a bullish channel, with the current move heading for the channel resistance. However, before that, USD/JPY might retest the recently broken 157.50 level before climbing the channel resistance. https://www.forexcrunch.com/blog/2024/06/14/usd-jpy-outlook-dovish-boj-sends-yen-to-1-month-lows/
2024-06-13 10:36
Data revealed that US consumer prices remained unchanged in May. Experts believe the downtrend in inflation could continue as major US retailers slash goods prices. After the inflation report, the likelihood of a Fed rate cut in September rose from 54% to 70%. The GBP/USD outlook is mildly bearish as the price pulls back after rising to new highs in the previous session. The retreat comes as the dollar recovers following hawkish sentiment at the Federal Reserve’s policy meeting. The pound rallied on Wednesday after data revealed that US consumer prices remained unchanged in May due to cheaper gasoline. This was a significant drop from the previous month when there had been a 0.3% increase. Meanwhile, economists had expected prices to increase by 0.1% during the month. Furthermore, core inflation significantly declined, leading to a surge in bets for two Fed rate cuts this year. Experts believe this downtrend could continue since major US retailers are slashing goods prices. This is also a sign that demand and consumer spending are weakening. Therefore, there is more pressure on the Fed to lower borrowing costs. After the inflation report, the likelihood of a rate cut in September rose from 54% to 70%. However, this outlook shifted slightly after the FOMC policy meeting, where policymakers were more hawkish than expected. Fed officials believe the economy remains robust. Therefore, they project the first rate cut in December. Meanwhile, data from the UK on Wednesday showed that UK economic growth stalled at the start of Q2 due to heavy rains. Markets are pricing in a 70% chance that the Bank of England will implement the first rate cut in September. GBP/USD key events today US core PPI m/m US PPI m/m US unemployment claims GBP/USD technical outlook: Bulls make a new high above 1.2800 On the technical side, the GBP/USD price temporarily breached the 1.2800 resistance level before falling back below. This indicates a sudden shift in sentiment that allowed bears to return to the market. However, the bullish bias remains strong, with the price above the 30-SMA and the RSI above 50. For some time, the price has traded in a range with support at 1.2700 and resistance at 1.2800. However, since the consolidation came after a bullish trend, there is a high chance bulls will take the lead again. Therefore, the price might retest the 1.2800 resistance. A break above would open the path to the 1.2900 psychological level. https://www.forexcrunch.com/blog/2024/06/13/gbp-usd-outlook-pound-retreats-after-cpi-led-gains/
2024-06-13 08:49
The dollar plunged on Wednesday after softer-than-expected consumer inflation data. Fed policymakers projected only one rate cut in 2024. Data on Thursday showed a bigger-than-expected increase in Australia’s employment in May. The AUD/USD forecast shows new bearish sentiment as the dollar recovers after the FOMC policy meeting. Meanwhile, the Australian dollar barely reacted to news that Australia’s labor market remained resilient in May. The dollar plunged on Wednesday after softer-than-expected consumer inflation data. The Consumer Price Index was flat in May compared to forecasts of a 0.1% increase. This was the second month of easing inflation, which led to a surge in confidence that the Fed would cut rates in September. Consequently, Treasury yields fell. If the downtrend in inflation is back, policymakers will be in a better position to shift to a more dovish tone. However, the move soon reversed when Fed officials concluded their policy meeting. Policymakers projected only one rate cut in 2024, compared to market expectations of at least two. Moreover, they noted that the outlook will depend heavily on incoming data. Still, the decline in inflation was a step in the right direction that will pave the way for rate cuts in the US. The outcome of the policy meeting boosted the dollar, which weighed on the Australian dollar. Meanwhile, data on Thursday showed a bigger-than-expected increase in Australia’s employment in May. The country added 39,700 jobs, well above economists expectations for 30,000. Meanwhile, the unemployment rate fell from 4.1% to 4.0%, showing resilience in the labor market. However, the Australian dollar barely reacted as traders already do not expect RBA rate cuts any time this year. There is less than a 50% chance that the RBA will cut rates in December. AUD/USD key events today US PPI report US unemployment claims AUD/USD technical forecast: Bulls puncture solid resistance On the technical side, the AUD/USD price made a sharp, bullish move that punctured its channel resistance before it retreated. This is a sign that bulls are gaining momentum and might soon break out of the bearish channel. Notably, the price sits above the 30-SMA while the RSI is above 50, supporting solid bullish momentum. Although it is back inside the channel, bulls might soon retest the channel resistance and the 0.6680 resistance level. A break above these levels would allow the price to retest the 0.6720 resistance. https://www.forexcrunch.com/blog/2024/06/13/aud-usd-forecast-dollar-bounces-back-post-fomc/
