2024-06-12 12:12
The EIA updated its demand growth forecasts to project a more positive outlook. A bigger-than-expected drop in US crude oil inventories signaled rising demand. Investors are positioning themselves for the US Consumer Price Index report and the Fed meeting. The USD/CAD forecast is bearish, with the Canadian dollar benefitting from an improved demand outlook for oil. Meanwhile, the US dollar has paused its recent rally as investors await the upcoming consumer inflation report and the Fed meeting. On Wednesday, the Canadian dollar was on the front foot, with oil climbing as the EIA updated its demand growth forecasts to project a more positive outlook. At the same time, a bigger-than-expected drop in crude oil inventories signaled rising demand. Meanwhile, the dollar retreated slightly after reaching a four-week peak in the previous session due to reduced Fed rate cut expectations. Last week’s jobs report showed a still-tight labor market that will likely keep the central bank from signaling early rate cuts. As a result, there is only a 56% chance of a cut in September, a significant drop from around 77% a week ago. Furthermore, the dollar’s retreat comes as investors position themselves for the US Consumer Price Index report and the Fed meeting. If the inflation report confirms that demand remains high in the economy, the dollar will rally with a decline in rate cut expectations. On the other hand, if it shows a slowdown, the greenback will collapse with an increase in rate-cut bets. Markets will then pay attention to the Fed’s projections for growth and inflation. This will give clues on when the central bank might be ready to start lowering borrowing costs. USD/CAD key events today US Consumer Price Index FOMC policy meeting FOMC press conference USD/CAD technical forecast: Bulls pause rally for a temporary retreat On the technical side, the USD/CAD price has paused its surge near the 1.3780 resistance level and is pulling back to retest the 30-SMA support. This move comes after bulls broke out of a bearish channel and took control, so the bullish bias is strong. As such, the price will likely soon find support and continue higher. Notably, there is support at the 30-SMA, the 1.3720 level, and the recently broken channel resistance. Consequently, there is a high chance that the price will bounce higher to seek a new high above 1.3780. https://www.forexcrunch.com/blog/2024/06/12/usd-cad-forecast-loonie-gains-on-upbeat-oil-demand/
2024-06-12 08:48
Investors were cautious before the US inflation report and the FOMC policy meeting. Economists expect headline inflation to fall from 0.3% to 0.1% in May. GDP data on Wednesday revealed no growth in the UK in April. The GBP/USD price analysis shows little movement, reflecting investor caution ahead of the pivotal US inflation report. The pound edged higher despite data showing a slowdown in the UK economy. The dollar paused its rally to a four-week high in the previous session as investors adopted a cautious stance before the US consumer inflation report and the FOMC policy meeting. Economists expect headline inflation to fall from 0.3% to 0.1% in May. Meanwhile, the Fed will probably keep interest rates unchanged and give projections of continued economic growth. Elsewhere, GDP data on Wednesday revealed no growth in the UK in April, down from a 0.4% expansion in March. The decline came due to rainy weather and relieved the Bank of England, which is planning to cut interest rates later this year. However, it had little impact on the pound because all focus was on the US inflation report. Employment data in the previous session also showed that the UK economy was declining. The unemployment rate rose from 4.3% to 4.4% in Q1. Moreover, the report showed that the number of those with jobs has dropped by 207,000 since the end of 2023, while the unemployed have risen by 190,000. GBP/USD key events today US CPI report FOMC meeting FOMC press conference GBP/USD technical price analysis: Bulls confront 30-SMA resistance On the technical side, the GBP/USD price is pushing up against the 30-SMA resistance as bulls attempt to take control. At the same time, the RSI has risen above 50, indicating a surge in bullish momentum. This move started when the price met the 1.2700 support level. If bulls succeed, the price will retest the 1.2800 resistance level. The previous bullish trend paused when it reached the 1.2800 resistance. It entered a consolidation period, but the RSI showed a bearish divergence, indicating weaker bullish momentum. Therefore, if bulls break above 1.2800, it will confirm a continuation of the uptrend. On the other hand, if the level holds firm, the price will fall back to retest the 1.2700 support. https://www.forexcrunch.com/blog/2024/06/12/gbp-usd-price-analysis-investors-on-edge-before-us-inflation/
2024-06-11 11:57
Investors have shifted their focus to the upcoming consumer inflation numbers. Economists are expecting softer US inflation figures this month. Japan’s service sector sentiment fell in May. The USD/JPY price analysis shows strong bullish sentiment as the dollar strengthens ahead of crucial inflation data. Investors are also gearing up for the Fed policy meeting, where there will be clues on the outlook for interest rate cuts. Meanwhile, the yen remained vulnerable as data revealed poor consumption in Japan due to the weak currency. After Friday’s blockbuster US jobs report, investors have shifted their focus to the upcoming consumer inflation numbers. However, the mood ahead of these figures shows that the Fed might delay cuts to November, given the strength of the US labor market. Therefore, the CPI report will either reinforce this view or revive bets for a cut in September. Economists are expecting softer figures this month after inflation fell the previous month. However, the report may surprise. Policymakers will then conclude their policy meeting, during which they will likely hold rates. Traders will look for clues on the future path of policy, which will be guided by the inflation figures. On the other hand, the yen remained fragile after Friday’s decline amid a rally in US Treasury yields. Moreover, data on Monday revealed that Japan’s service sector sentiment fell in May as the weak yen increased the cost of living. This indicates that consumption is fragile, complicating the outlook for BoJ rate hikes. However, a separate report revealed that Japan’s economy contracted at a milder rate than previously reported, relieving the BoJ. Japan’s GDP declined by 1.8% compared to estimates of a 2.0% decline. Still, the weak yen continues to cloud the economy’s outlook. USD/JPY key events today Neither Japan nor the US will release high-impact reports. As a result, the pair might consolidate. USD/JPY technical price analysis: Bulls approaching 157.50 On the technical side, the USD/JPY price is approaching the 157.50 resistance level after finding support near the 155.00 level. Moreover, it has made a series of higher highs and lows that confirm a bullish trend. Bullish momentum recently surged, allowing the price to break above the 30-SMA and the RSI above 50. Given the solid bullish bias, the price might soon break above 157.50 to make a new high and retest its bullish channel resistance. https://www.forexcrunch.com/blog/2024/06/11/usd-jpy-price-analysis-bulls-cheer-as-us-inflation-data-looms/
2024-06-11 08:33
The dollar remained strong after the recent surge in Treasury yields. All eyes are on the Consumer Price Index report and the Fed meeting. Data from Australia on Tuesday revealed weaker business conditions in May. The AUD/USD outlook points south as the dollar holds firm ahead of US consumer inflation data and the FOMC policy meeting. Meanwhile, the Australian dollar was frail after data revealed weaker business conditions in May. The dollar remained strong after the recent surge in Treasury yields due to better-than-expected job numbers. The US employment report on Friday renewed doubts about a slowdown in the US economy that would allow the Fed to start cutting rates. All eyes are now on the Consumer Price Index report and the Fed meeting for more clues on when the Fed might start lowering interest rates. Inflation forecasts show the headline figure easing to 0.1% from 0.3% the previous month. The inflation report will determine the tone policymakers will adopt at the FOMC meeting. A higher number will reduce policymakers’ confidence that inflation will reach the 2% target, leading to a hawkish stance. On the other hand, a slower inflation rate could allow policymakers to adopt a more dovish stance. Meanwhile, data from Australia on Tuesday revealed weaker business conditions in May as profits and sales growth declined. However, there were signs that cost pressures were accelerating, creating a mixed picture for the RBA. Nonetheless, investors are only fully pricing in the first RBA rate cut in July next year. AUD/USD key events today There are no key events scheduled for today from Australia or the US. Therefore, investors will keep speculating ahead of the US inflation report. AUD/USD technical outlook: Bears intensify within bearish channel On the technical side, the AUD/USD price is trading well below the 30-SMA, with the RSI in bearish territory below 50. Therefore, the bias is bearish. At the same time, the price trades within a bearish channel, respecting the solid support and resistance. The recent decline hit the 0.6580 support level, where the price paused, and bulls took over. However, the bullish move seems a lot weaker than the decline. Therefore, there is a chance it will pause at the 30-SMA, where bears will resume control. If this happens, the price will likely take out the 0.6580 support for a new low. https://www.forexcrunch.com/blog/2024/06/11/aud-usd-outlook-dollar-steadies-ahead-of-cpi-fomc/
2024-06-10 10:53
There was political tension after French President Emmanuel Macron called for a snap election. The euro suffered as the dollar rallied after Friday’s nonfarm payrolls report. Markets scaled back expectations for Fed rate cuts in 2024 from 50 to 35 basis points. The EUR/USD outlook remains bearish as the euro hovers near a one-month low, weighed down by political uncertainty. Compounding the euro’s woes, the currency has weakened further against a robust dollar, which surged following an upbeat employment report. There was political tension after French President Emmanuel Macron called for a snap election. This came after the European parliamentary elections, where the right-wing parties took most of the seats. This left major powers like Germany and France in a weak position, making it more challenging to drive policy in the bloc. Furthermore, the euro suffered as the dollar rallied after Friday’s nonfarm payrolls report. US employers hired more people than expected in May, raising doubts about a slowdown in the labor market. 272,000 more jobs were created in the US last month, well above expectations for 185,000. This was a confirmation that labor market resilience remained. The previous report had raised expectations that the Fed would cut rates as it showed a massive miss in job growth. However, in May, the economy returned to creating many jobs that drive price increases. As a result, markets scaled back expectations for rate cuts in 2024 from 50 to 35 basis points. At the same time, the chances of a cut in September fell from 70% to 50%. EUR/USD key events today Investors do not expect key events today. Consequently, they will keep absorbing recent economic and political developments in the US and the Eurozone. EUR/USD technical outlook: Bears confirm new direction with a gap below 1.0800 On the technical side, the EUR/USD price has confirmed a new direction after breaking out of consolidation. The previous bullish trend paused, and the price started trading sideways, with support at 1.0800 and resistance at 1.0900. Throughout this consolidation period, the price chopped through the 30-SMA while the RSI kept breaking the pivotal 50 mark. Moreover, the RSI made a slight bearish divergence with the price, showing weaker bullish momentum. This allowed bears to take control with solid momentum, leading to a gap below the 1.0800 support level. Bears are now targeting the 1.0725 support level. https://www.forexcrunch.com/blog/2024/06/10/eur-usd-outlook-breaks-1-08-amid-political-uncertainty/
2024-06-10 08:41
The US added more jobs in May than economists had forecast. The US unemployment rate rose from 3.9% to 4.0%. The total Fed cuts expected this year fell from 50 to 35 basis points. The USD/CAD forecast looks promisingly bullish as the dollar surges following Friday’s unexpectedly strong jobs report. The US nonfarm payrolls overshadowed Canada’s increase in employment and weighed on the Canadian dollar. Data on Friday showed that the US added more jobs in May than economists had forecast. Employment rose 272,000 compared to expectations of an 185,000 increase. Consequently, the labor market remains robust despite high interest rates. The Fed will likely push back the timing for the first cut as it awaits more evidence of a slowdown in the economy. However, there were some signs of weakness in the sector, as seen in the unemployment rate, which rose from 3.9% to 4.0%. Still, it was not enough to keep rate cut expectations from falling. Before the report, there was nearly a 70% chance that the Fed would cut rates in September. However, this dropped to 50% when market participants realized that demand in the labor market remained relatively high. Moreover, the total cuts expected this year fell from 50 to 35 basis points. At the same time, Canada released its monthly employment report, which showed a marginal increase in employment, beating forecasts. Meanwhile, the unemployment rate increased from 6.1% to 6.2% in April. The result was a decline in the likelihood of a Bank of Canada rate cut in July from 50% to 44%. However, the rising US dollar overshadowed any strength in the Canadian dollar. USD/CAD key events today There won’t be any high-impact releases from the US or Canada today. As a result, the price will likely consolidate. USD/CAD technical forecast: Bulls eye 1.3780 after channel breakout On the technical side, the USD/CAD price has made a bold, bullish move and broken out of its shallow bearish channel. Initially, bulls attempted to break out of the channel resistance but failed, making a large wick. The price then pulled back to retest the 30-SMA support, which held firm. The pair made another strong surge from here that breached the channel resistance and the 1.3720 level. The bulls are now eyeing the 1.3780 level. Here, the rally might pause for a break before continuing higher or retesting the 30-SMA. https://www.forexcrunch.com/blog/2024/06/10/usd-cad-forecast-robust-nfp-report-sends-dollar-higher/
