2024-05-15 13:16
US consumer prices rose by 0.3% in April, a decline from the previous month’s 0.4% increase. US retail sales fell to 0.0% from 0.7% the previous month. Australia’s wage growth surprisingly slowed from 15-year highs in Q1. The AUD/USD forecast shows a surge in bullish sentiment as the dollar plunges after a downbeat consumer inflation report. Consequently, there is a higher chance that the Fed will cut rates in September. Meanwhile, rate cuts in Australia might start in 2025, putting the Aussie in a stronger position against the dollar. US consumer prices rose by 0.3% in April, a decline from the previous month’s 0.4% increase. Meanwhile, on an annual basis, inflation came in line with expectations, dropping from 3.5% to 3.4%. This will likely give policymakers more confidence that the downtrend is intact. Therefore, after a short pause, consumer prices might continue lower. Notably, Powell maintained this outlook on Tuesday when he said inflation would still decline. Meanwhile, there was more relief for the Fed as retail sales fell to 0.0% from 0.7% the previous month. Economists had expected a smaller decline to 0.4%. Elsewhere, data from Australia on Wednesday showed wage growth surprisingly slowed from 15-year highs in the first quarter, indicating looser labor market conditions. Annual wage growth fell from 4.3% to 3.8%. As a result, there is less pressure on the RBA to hike rates. Still, rate cuts might not start in Australia until next year. Moreover, there is still an 8% chance that the RBA will hike rates later in the year. This means the Aussie will keep its edge against the dollar. AUD/USD key events today Investors will keep absorbing the US consumer inflation as no more key reports are expected from Australia or the US. AUD/USD technical forecast: Bullish momentum surges past solid resistance On the technical side, the AUD/USD price has broken above the 0.6650 resistance barrier amid a surge in bullish momentum. At the same time, the RSI has entered the overbought region, showing solid bullish momentum and supporting a bullish bias. This surge comes after the price found support at its bullish trendline and the 30-SMA line. If the price closes above 0.6650, it will confirm a continuation of the larger bullish trend. However, if it pulls back below, it could reverse to the support trendline and 30-SMA support. https://www.forexcrunch.com/blog/2024/05/15/aud-usd-forecast-dollar-dips-as-cpi-misses-forecast/
2024-05-15 08:51
The US released hotter-than-expected Producer Price Index (PPI) figures. Investors expect only 44 basis points of Fed rate cuts in 2024. British wages minus bonuses grew by 6.0% in the first quarter of 2024. The GBP/USD price analysis shows bullish optimism as the dollar falters in the aftermath of the US wholesale inflation report. All eyes are now on the imminent release of US consumer inflation data. Meanwhile, the pound recovered after diving due to dovish policy remarks. On Tuesday, the US released hotter-than-expected Producer Price Index (PPI) figures, indicating still-high inflation in the country. Wholesale inflation rose 0.5% in April, beating forecasts for a 0.3% increase. After the report, markets lowered expectations for Fed rate cuts. Currently, investors expect only 44 basis points of cuts in 2024. The report initially led to a spike in the dollar. However, the move later reversed, showing investors had priced in such an outcome. Therefore, when it happened, they were ready to book profits, leading to a dollar decline. Investors are now waiting for the CPI report. Meanwhile, in the UK, employment data revealed strength in the labor market. However, there were signs that conditions were easing, which would allow the Bank of England to start cutting interest rates. Notably, wages minus bonuses grew by 6.0% in the first quarter of 2024 compared to the same period last year. This was above estimates for a 5.9% increase, boosting the pound. However, there was a reversal in gains when Bank of England economist Huw Pill said that the central bank might be ready to cut rates by summer. GBP/USD key events today US CPI report US retail sales report Empire State Manufacturing Index GBP/USD technical price analysis: Price revisits 1.2600 level with renewed momentum On the technical side, the GBP/USD price is retesting the 1.2600 resistance level after finding support at the 30-SMA. The bullish bias is strong, with the price well above the SMA and the RSI near the overbought region. The price resumed its bullish trend after finding support at the 0.5% Fib retracement level. Bulls made an engulfing candle, leading to a break above the SMA. After that, they confirmed the new bias by retesting the SMA as support. Therefore, there is a high chance the price will breach 1.2600 and climb to retest the 1.2700 psychological level. https://www.forexcrunch.com/blog/2024/05/15/gbp-usd-price-analysis-dollar-softens-post-ppi-eyes-on-cpi/
2024-05-14 09:52
Business activity in the Euro Area expanded at a faster rate than that in the US in April. The euro has lost nearly 2.5% of its value against the dollar this year. Investors are awaiting the US PPI report. The EUR/USD outlook is bullish, as the euro shows remarkable resilience ahead of US wholesale inflation data. Despite a small pullback, the pair has sustained its recent uptrend amid signs that the economic performance gap between the Eurozone and the US is closing. Notably, recent data has revealed some economic improvements that have eased pressure on the ECB to cut rates. Moreover, business activity in the Euro Area expanded faster than in the US in April. At the same time, employment and growth figures in the US missed forecasts. Therefore, as pressure eases off the ECB, there is more pressure on the Fed to cut interest rates. This has allowed the EUR/USD pair to rise despite looming ECB rate cuts. Still, the euro has lost nearly 2.5% of its value against the dollar this year. This decline was mostly due to the divergence in policy outlooks between the ECB and the Fed. Markets expect the European Central Bank to cut rates three times this year. Meanwhile, the Fed might only cut twice. Moreover, this outlook could change with more inflation data from the US. The number of expected Fed cuts could be reduced if inflation beats forecasts. Furthermore, investors will likely push back the timing of the first rate cut. Consequently, the euro would fall. On the other hand, easing inflation would solidify Fed rate cut bets, allowing the euro to continue recovering. EUR/USD key events today US Core PPI m/m US PPI m/m Fed Chair Powell Speaks EUR/USD technical outlook: Bulls challenge 1.0800 after retesting channel support On the technical side, the EUR/USD price has risen to retest the 1.0800 resistance level. This comes after a big bounce from the 1.0725 support level. Here, the price made a bullish engulfing candle, respecting a solid support level comprising its bullish channel line and the 1.0725 level. After retesting its channel support, the price will likely rise to its channel resistance. However, to do that, bulls must break above 1.0800. Notably, EUR/USD is above the 30-SMA, and the RSI is above 50. Therefore, the bullish bias is strong. If this continues, the price will soon breach 1.0800. https://www.forexcrunch.com/blog/2024/05/14/eur-usd-outlook-euro-steadies-ahead-of-us-ppi-data/
2024-05-14 09:50
The dollar strengthened as investors prepared for the US PPI and CPI reports. There is a 50% probability of a Fed cut in September. Economists expect US consumer inflation to drop to 0.3% in April from 0.4%. The USD/JPY price analysis points northward as the dollar strengthens ahead of US inflation data. Meanwhile, the yen fell to a two-week low, raising fears that Japanese authorities might try to support their currency. The dollar strengthened as investors prepared for the US PPI and CPI reports, which will tell more on what the Fed might do in the future. Recent poor data from the US has raised bets that there might be two Fed cuts this year. Notably, weaker demand in the economy could lead to lower inflation. Furthermore, most policymakers have confirmed that the next policy move will be a rate cut. Still, the chances of a cut in September have fallen to 50% ahead of the inflation report. This decline comes because markets fear another upbeat report. The trend in recent months has been hotter than expected inflation figures. This time, economists expect the US consumer inflation to drop to 0.3% in April from 0.4% the previous month. Before this, there will be the wholesale inflation report. Any indications that inflation remains persistent could send rate-cut expectations lower. Meanwhile, the yen continued its post-intervention slide, raising concerns in Japan. On Tuesday, Japan’s Finance Minister Shunichi Suzuki said that the government will work closely with the BoJ to ensure they align their policy objectives. USD/JPY key events today US Core PPI m/m US PPI m/m Fed Chair Powell Speaks USD/JPY technical price analysis: Bulls set their sights on 158.00 On the technical side, the USD/JPY price has retraced more than 50% of its previous move. At the same time, it has broken above the 156.00 resistance level. The price has stayed comfortably above the 30-SMA for some time. Although the uptrend is a bit shallow, it barely pauses or pulls back. This means it might continue higher. The next target for the USD/JPY pair is at the 158.00 resistance level. Bullish momentum is strong, with the RSI nearly overbought. Therefore, nothing is stopping the price from reaching 158.00. Only a sudden catalyst in the opposite direction could break below the SMA and reverse the sentiment. https://www.forexcrunch.com/blog/2024/05/14/usd-jpy-price-analysis-yen-slips-to-2-week-low-before-inflation/
2024-05-13 10:29
The Canadian dollar rallied on Friday after data revealed that Canada added 90,400 jobs. The likelihood of a BoC cut in June fell to 44% after Canada’s employment report. US data revealed higher expectations for inflation in the year ahead. The USD/CAD outlook leans bearish as the pair lingers near recent lows following an unexpected surge in Canada’s employment numbers on Friday. Meanwhile, all eyes are on this week’s US inflation data for clues on the Fed’s policy outlook. The Canadian dollar rallied on Friday after data revealed that Canada added 90,400 jobs. This was about five times what economists had expected. Meanwhile, the unemployment rate held steady at 6.1%. The report surprised investors, who were convinced that Canada’s economy was deteriorating due to high interest rates. Consequently, there was a sharp decline in rate-cut expectations. Before the report, investors were pricing in a 60% chance that the Bank of Canada would cut rates in June. However, this figure fell to 44% after the report. The rally in the Canadian dollar pushed the USD/CAD pair lower, but not for long. The US dollar strengthened on Friday as data revealed higher expectations for inflation in the year ahead. In May, consumers raised expectations for inflation from 3.2% to 3.5%. This can become a big challenge for the Fed as expectations for inflation can actually drive inflation higher. Still, rate cut bets have risen since the poor US jobs report with investors now expecting two rate cuts this year totalling 50 basis points. Market participants are now awaiting the US PPI and CPI reports. These will further shape expectations for the timing of the Fed’s next policy move. USD/CAD key events today The pair will likely consolidate ahead of US inflation figures as no major reports are coming from Canada or the US. USD/CAD technical outlook: Bears challenging 1.3650 support On the technical side, USD/CAD has fallen to retest the 1.3650 key support level after respecting a solid resistance trendline. The bias is bearish because the price trades below the 30-SMA with the RSI in bearish territory below 50. However, the bearish move has paused at 1.3650, which has repeatedly reversed the price. If the support holds firm again, the price will rise to retest its resistance trendline. However, if bears are strong enough to breach the support this time, the price will fall to retest the 1.3551 level. https://www.forexcrunch.com/blog/2024/05/13/usd-cad-outlook-bearish-pressure-amid-canadas-jobs-surge/
2024-05-13 08:15
Investors are eagerly expecting US inflation data. There is a 61.2% chance that the Fed will cut rates in September. Australia’s government expects inflation to reach the central bank’s target by the end of this year. The AUD/USD forecast reveals a flat trajectory, marked by the dollar’s consolidation ahead of significant US inflation figures. Investors are mostly on the sidelines, awaiting more clues on the Fed’s rate-cut outlook. As a result, trading is thin. Fed rate-cut expectations have risen recently after the US released several downbeat reports. Employment figures and service activity data pointed to a slowdown in the economy. As a result, investors are more confident that high interest rates are lowering economic demand. For this reason, there is a 61.2% chance that the Fed will cut rates in September. At the same time, markets are betting that the Fed will implement cuts totalling 50 basis points this year. However, inflation figures are more significant in shaping rate-cut expectations. Therefore, there is a lot of anticipation in the markets to see whether inflation will support or lower these expectations. As we draw nearer to the September meeting, policymakers seek more evidence that inflation is on a clear downtrend. If there is no such evidence in the remaining inflation reports, they might not be confident enough to start cutting rates this year. Elsewhere, Australia’s government expects inflation to reach the central bank’s target by the end of this year. This is a more optimistic view than the RBA’s. Economists in the central bank expect inflation to end the year at around 3.8%. AUD/USD key events today It will be a quiet session, as neither Australia nor the US will release high-impact economic data. AUD/USD technical forecast: Consolidation near 30-SMA On the technical side, the AUD/USD price is consolidating near the 30-SMA after the bulls recently took back control. Initially, the price fell and punctured the 30-SMA, threatening the bullish bias. However, the bulls were back in the lead when the price broke above the SMA. At the same time, the RSI is back above 50, in bullish territory. Although bulls are holding the reins, momentum has weakened and the price is making small-bodied candles. If bulls find their footing above the SMA, the price will likely rise to 0.6650. Otherwise, it will fall further to retest the bullish trendline. https://www.forexcrunch.com/blog/2024/05/13/aud-usd-forecast-dollar-consolidates-ahead-of-key-data/
