2024-06-02 07:53

Data on Friday revealed hotter-than-expected Eurozone inflation in May. The core PCE price index report revealed a decline in US inflation Investors eagerly await the nonfarm payrolls report. The EUR/USD weekly forecast is bullish as Eurozone inflation unexpectedly rises, contrasting with a drop in US inflation. Ups and downs of EUR/USD EUR/USD had a nearly flat week but closed well above its lows. The week started with a rally in the dollar after the release of better-than-expected consumer confidence figures. However, the euro was back on the front foot when data showed a decline in US GDP in Q1, raising expectations that the Fed will cut rates in September. Moreover, data on Friday revealed hotter-than-expected Eurozone inflation in May. The CPI rose from 2.4% to 2.6%, beating forecasts for a 2.5% increase. This slightly lowered expectations for an ECB rate cut next week, boosting the euro. More support came from a decline in US inflation as shown by the core PCE price index report. Next week’s key events for EUR/USD Next week, the US will release data on business activity in the manufacturing sector. Additionally, investors will watch the nonfarm payrolls report for clues on the Fed’s policy path. Meanwhile, in the Eurozone, traders will monitor the outcome of the European parliamentary elections. The US employment report comes when there is uncertainty about the Fed’s policy outlook. The last monthly report revealed softer labor market conditions that raised expectations for rate cuts in the US. Another such report would indicate the start of a downtrend in the sector that would pressure the Fed to start lowering borrowing costs. EUR/USD weekly technical forecast: Bulls seek new high above resistance trendline On the technical side, the EUR/USD price has broken above a strong bearish trendline and is looking to make a higher high. Moreover, it has respected the 22-SMA as support, showing bulls are in control. At the same time, the RSI is rising after finding support at the 50 level, a sign of strong bullish momentum. However, the price must break above the 1.0900 resistance level before making a new high. A break above this level would clear the path for bulls to retest the 1.1101 resistance. However, if the resistance holds firm, the price might fall below the 22-SMA to retest the recently broken trendline before continuing higher. https://www.forexcrunch.com/blog/2024/06/02/eur-usd-weekly-forecast-eu-inflation-rises-us-inflation-falls/

2024-06-01 08:53

Upbeat consumer confidence data from the US sent the dollar soaring. Canada’s GDP fell from 0.2% to 0.0% on a monthly basis. Markets are pricing a 60% chance of a rate cut in Canada on coming Wednesday. The USD/CAD weekly forecast shows more downside potential as there is a high chance that the Bank of Canada will cut rates next week, well ahead of the Fed. Ups and downs of USD/CAD USD/CAD fluctuated throughout the week but ended lower after poor US inflation data. When the week started, upbeat consumer confidence data from the US sent the dollar soaring against the Canadian dollar. However, the trend changed when, on Thursday, US data revealed a drop in GDP from 1.6% to 1.3% in Q1. Similarly, Canada’s GDP fell from 0.2% to 0.0% on a monthly basis. Therefore, the Bank of Canada is under more pressure to cut rates next week. The major catalyst for the week was the US core PCE index, which revealed an unexpected decline in inflation from 0.3 to 0.2%. This raised bets that the Fed will cut rates in September. Next week’s key events for USD/CAD Next week, investors will focus on the Bank of Canada policy meeting and employment data from Canada. At the same time, the US will release PMI data and the nonfarm payrolls report. The BoC policy meeting comes after much speculation on the central bank’s rate-cutting cycle. On coming Wednesday, markets are pricing a 60% chance of a rate cut in Canada. Meanwhile, the NFP report will give more clues on the outlook for rate cuts in the US as it will show the state of the labor market. USD/CAD weekly technical forecast: Bears approach solid support at 1.3601 On the technical side, the USD/CAD price has broken below its bullish trendline and is approaching the 1.3601 support level. This comes after the bullish trend rose to the 1.3803 resistance level. Although sentiment has shifted to bearish, the move lower has been choppy, showing it might be a corrective move. If it is, the price will likely bounce off the 1.3601 to retest the 1.3803 resistance level. A break above this resistance would make a higher high, confirming a continuation of the bullish trend. However, if bears make a stronger move in the coming week, the price could break below 1.3601 to retest the 1.3400 support level. https://www.forexcrunch.com/blog/2024/06/01/usd-cad-weekly-forecast-boc-poised-for-early-rate-cut/

2024-05-31 10:06

Investors are awaiting the US core PCE price index report for more clues on Fed policy. US GDP data came in lower than expected at 1.3% in Q1. Markets expect only 27 basis points of BoE rate cuts this year. The GBP/USD price analysis shows bears in the lead as the dollar strengthens ahead of crucial US inflation data. On the other hand, the pound was weak despite the recent drop in Bank of England rate cut expectations. The greenback recovered against the pound on Friday as investors awaited the US core PCE price index report for more clues on the Fed’s rate cut outlook. Forecasts show that the figure will hold at 0.3% from the previous month. However, there is a chance that it might surprise. It has been a wild ride for rate cut expectations in the US as data has mostly been mixed. Last week, the dollar was rallying as business activity data came in higher than expected. Additionally, this week, there was a spike in consumer sentiment, leading to a decline in expectations for rate cuts. Still, there have been signs that the robust economy is showing cracks that could prompt the Fed to cut rates this year. Notably, consumer inflation eased in April. Moreover, yesterday’s GDP data came in lower than expected at 1.3% in Q1 from a previous reading of 1.6%. Meanwhile, in the UK, Bank of England rate cut expectations have fallen since the release of better-than-expected growth and inflation figures. Markets now expect only 27 basis points of rate cuts this year, which means one cut in 2024. GBP/USD key events today US core PCE price index GBP/USD technical price analysis: Price breaks below 30-SMA On the technical side, the GBP/USD price has finally broken below and retested the 30-SMA, showing a new bearish sentiment. The decline came after the price found resistance at the 1.2800 key psychological level. Bears had already started showing signs of a looming reversal when the price made a bearish engulfing candle. However, it continued higher as bulls struggled to hold onto control. Meanwhile, the RSI showed weaker bullish momentum as it made a bearish divergence. Bears were finally strong enough to breach the 30-SMA support, retest it and are now looking to make a lower low. The bearish move will continue if the price breaks below the 1.2700 support level. https://www.forexcrunch.com/blog/2024/05/31/gbp-usd-price-analysis-dollar-rises-in-wake-of-inflation-data/

2024-05-31 09:30

The US economy grew at an annual rate of 1.3% in Q1, down from 1.6%. Investors are gearing up for the US core PCE price index. There was an increase in core consumer inflation in Tokyo. The USD/JPY outlook shows a slight bearish tilt as the dollar declines after weaker-than-expected GDP data and ahead of inflation figures. Meanwhile, Japan’s inflation numbers showed a mixed picture, complicating the outlook for Bank of Japan rate cuts. Data on Thursday revealed that the US economy grew at an annual rate of 1.3% in Q1, down from 1.6%. Weaker-than-expected economic growth shows the impact of high borrowing costs, which puts pressure on the Fed to start cutting interest rates. This renewed hopes for a Fed rate cut this year, with the likelihood of one in September rising from 51% to 55%. Investors are gearing up for this week’s most significant report: the core PCE price index. This index will give a clear picture of underlying inflation in the US and guide traders on whether the Fed will implement rate cuts this year and when. Economists expect the figure to hold steady at 0.3%. Another upbeat inflation report would lead to a rally in USD/JPY that would renew fears of an intervention. Elsewhere, data from Japan showed an increase in core consumer inflation in Tokyo. However, figures excluding fuel eased, raising uncertainty about the Bank of Japan’s rate hike cycle. At the same time, there was an unexpected decline in factory output in April, highlighting Japan’s weak economic recovery. A fragile economy complicates the BoJ’s plans to hike interest rates. Therefore, the interest rate differential between the US and Japan could remain wide, weakening the yen. USD/JPY key events today US core PCE price index m/m USD/JPY technical outlook: Decline pauses at 156.50 On the technical side, the USD/JPY price has broken below the 30-SMA, showing a shift in sentiment from bullish to bearish. However, the decline has paused at the 156.50 support level. Moreover, on a larger scale, the price remains in an uptrend, making higher highs and lows. Consequently, it might bounce off 156.50 to retest the 158.00 level. Even if it breaks below 156.50, the USD/JPY price would meet solid support at the bullish trendline. Only a break below this trendline would signal a reversal in the trend. Otherwise, bulls will likely remain in control. https://www.forexcrunch.com/blog/2024/05/31/usd-jpy-outlook-dollar-tumbles-following-downbeat-gdp/

2024-05-30 12:14

The dollar rose with Treasury yields. The Canadian dollar fell with oil prices. There is a 60% chance that the BoC will cut rates on Wednesday next week. The USD/CAD outlook shows a surge in bullish momentum as the dollar rallies with rising Treasury yields due to expectations that the Fed will keep high rates for longer. Meanwhile, the Canadian dollar fell with oil prices as investors worried about the impact of high interest rates on fuel demand. It was a green day for the dollar, which benefited from safe-haven inflows as investors scrambled for safety due to the spike in Treasury yields. As a result, most major peers, such as the Canadian dollar, fell. The rise in yields started when the US released better-than-expected economic data last week. As a result, rate cut expectations fell. However, the move escalated, with yields reaching a four-week peak after a weak debt auction in the US. The next major catalyst for the dollar will be the Friday inflation report. This will give market participants more insight into the Fed’s policy path. Meanwhile, the Canadian dollar was on the back foot as oil prices declined in response to fears of further delays in Fed rate cuts. High borrowing costs hurt economic activity, which in turn lowers demand for oil. Canada, a major oil exporter, suffers losses when demand goes down, which weighs on the country’s currency. Investors are awaiting GDP data from Canada on Friday, which might show an annual growth rate of 2.2% in Q1. This will give traders clues on the outlook for Bank of Canada rate cuts. Currently, there is a 60% chance that the BoC will cut rates on Wednesday next week. USD/CAD key events today US preliminary GDP US jobless claims US pending home sales USD/CAD technical outlook: 1.3730 resistance retested On the technical side, the USD/CAD price has risen to retest the 1.3730 resistance level after finding support at the 1.3625 level. Although the price sits well above the 30-SMA, there is no clear direction since it has mostly chopped through the SMA line. Still, the current bias is bullish, with the RSI well above 50, which supports solid momentum. Therefore, a pause or pullback to retest the SMA might occur before the uptrend continues. A break above 1.3730 would clear the path for bulls to retest the 1.3775 resistance level. https://www.forexcrunch.com/blog/2024/05/30/usd-cad-outlook-greenback-soars-amid-feds-policy-outlook/

2024-05-30 08:23

Treasury yields have risen this week due to better-than-expected US data A recent auction in the US revealed lower demand for the country’s debt. Data from the Eurozone showed a bigger-than-expected increase in German inflation. The EUR/USD forecast points South as the dollar trades near a two-week high amid a rally in Treasury yields. Meanwhile, the euro remains weaker as markets prepare for an ECB rate cut next week. A rally in US yields spooked investors, leading to a scramble for the dollar’s safety. Treasury yields have risen this week due to better-than-expected US data, raising doubts about a Fed cut in September. At the same time, a recent auction in the US revealed lower demand for the country’s debt. Investors are now looking forward to US GDP and unemployment figures. However, the focus is on the core PCE price index, which comes on Friday. This report will show whether inflation is easing or remains stubborn. Consequently, it will significantly impact the outlook for rate cuts in the US. Elsewhere, data from the Eurozone showed a bigger-than-expected increase in German inflation by 2.8% in May. This was slightly bigger than the forecast of 2.7% and came after a rise of 2.4% in the previous month. However, economists had expected this spike. Therefore, it had little impact on expectations for an ECB rate cut next week. A Reuters poll revealed that all economists expect the European Central Bank to implement its first cut in June. Moreover, economists expect another cut in September and December. This is a more dovish outlook as markets forecast only two cuts in 2024. EUR/USD key events today US preliminary GDP q/q US unemployment claims US pending home sales m/m EUR/USD technical forecast: New low confirms a bearish reversal On the technical side, the EUR/USD price has broken below the 1.0800 critical support level after a sharp bearish move. This comes after the price broke out of its bullish channel. The initial breakout paused when bulls tried to take back control. However, bears overpowered them and broke below 30-SMA and 1.0800 to make a lower low. This confirms the start of a downtrend with lower highs and lows. Furthermore, the RSI shows solid bearish momentum as it prepares to dip into the oversold region. Given the strong bearish bias, the price will likely fall to retest the 1.0725 support level. https://www.forexcrunch.com/blog/2024/05/30/eur-usd-forecast-us-yields-rally-leads-dollar-to-2-week-top/