2024-05-12 10:21
US Unemployment claims rose to a bigger-than-expected 231,000 in the previous week. Markets predict two Fed cuts in 2024, with the first probably in September. Next week, the US will release its wholesale and consumer inflation reports. The EUR/USD weekly forecast points to more bullish momentum as the easing US labor market supports Fed rate cut expectations. Ups and downs of EUR/USD The EUR/USD pair had a slightly bullish week characterized by dollar weakness. Investors were still digesting the poor nonfarm payrolls report when the US released more downbeat employment data. Unemployment claims rose to a bigger-than-expected 231,000 in the previous week, indicating more cracks in the resilient labor market. As a result, there was an increase in Fed rate cut expectations. Markets now predict two cuts in 2024, with the first probably in September. Next week’s key events for EUR/USD Next week, the US will release its wholesale and consumer inflation reports. At the same time, investors will pay attention to the retail sales report. Inflation data will significantly impact the market as it will give insight into the outlook for Fed rate cuts. There is a lot of anticipation for this particular report because recent data from the country has shown a slowdown in the economy. Therefore, market participants are waiting to see if this will translate to lower inflation. At the same time, retail sales data will show the state of demand and consumer spending. A decline in sales would indicate further economic deterioration, which would allow the Fed to start cutting rates in September. However, if any of these reports come in higher than expected, investors will push back the timing for Fed rate cuts. EUR/USD weekly technical forecast: Bulls challenge solid resistance trendline On the technical side, the EUR/USD price trades above the 22-SMA. At the same time, the RSI supports bullish momentum as it trades above 50. However, although the sentiment is bullish, the larger trend remains down because the price is still making lower highs and lows. Moreover, although the price has made deep pullbacks, it has respected its bearish trendline. At the moment, bulls are retesting the resistance trendline. If the resistance holds firm as before, the price will fall below the 22-SMA to retest the 1.0601 support level. On the other hand, the bullish bias will strengthen if the price breaches the trendline and the 1.0850 resistance level. https://www.forexcrunch.com/blog/2024/05/12/eur-usd-weekly-forecast-easing-us-jobs-market-boosts-eur/
2024-05-11 19:41
The RBA was not as hawkish as most had expected. Australia recently reported higher-than-expected figures for Q1 inflation and employment. The dollar was weak after unemployment claims jumped. The AUD/USD weekly forecast remains bullish. The dollar weakness could continue next week with a focus on the US inflation report. Ups and downs of AUD/USD The AUD/USD pair had a slightly bearish week as markets absorbed the outcome of the RBA policy meeting. On Tuesday, the Reserve Bank of Australia held rates as expected. However, the central bank was not as hawkish as most had expected. Australia recently reported higher-than-expected figures for Q1 inflation and employment. As a result, economists had expected that the RBA would signal a possible rate hike. When they did not, the Aussie fell. Meanwhile, the dollar was also weak after unemployment claims jumped, confirming easing labor market conditions. Next week’s key events for AUD/USD Major reports from the US next week will include inflation and retail sales. At the same time, investors will focus on Australia’s employment figures. The US PPI and CPI figures will guide the Federal Reserve on the next step to take regarding monetary policy. Higher-than-expected figures would mean further delays in rate cuts. On the other hand, lower-than-expected figures would increase the chance of a rate cut in September. Meanwhile, Australia’s employment figures will show the state of its labor market which has remained resilient. AUD/USD weekly technical forecast: Bulls pause below the 0.6650 solid barrier On the daily chart, the bias for the AUD/USD price is bullish because it sits above the 22-SMA, and the RSI is above 50. However, on a larger scale, the price has remained in a sideways move for some time now. It has mostly traded between the 0.6475 support and the 0.6650 resistance level. Bears once tried to break out of this range area but failed, making a false breakout. Now, the price is back to the resistance level. The level is strong because it lies between the 0.5 and 0.618 key Fib levels. Therefore, bulls face a solid barrier that could lead to another bounce lower. In the coming week, bulls will need a significant catalyst to break past this resistance zone. This would clear the path to the 0.6850 resistance level. However, if the resistance holds firm, the price will likely fall to retest the 0.6475 support. https://www.forexcrunch.com/blog/2024/05/11/aud-usd-weekly-forecast-greenback-weak-focus-on-us-cpi/
2024-05-10 09:38
Consumer spending in Japan declined for the 13th month in March. Economists in a Reuters poll expect Japan’s economy to shrink in Q1. There was an unexpected increase in US initial unemployment claims last week. The latest USD/JPY price analysis indicates a bullish trend as the yen weakens following a drop in Japan’s consumer spending for March. The disappointing report has clouded the outlook for potential rate hikes by the Bank of Japan. Data on Friday showed that consumer spending in Japan declined for the 13th month in March. Weak spending could be a sign that consumers are not earning as much. Therefore, prices will remain low, challenging the Bank of Japan’s outlook for rate hikes. In the previous session, data revealed that real wages in Japan fell two years in a row, another challenge for the Bank of Japan. Meanwhile, economists in a Reuters poll expect Japan’s economy to shrink in the first quarter of 2024 due to weak demand. These are all bearish for the yen which is struggling at a weak position against the dollar. Notably, most major currencies gained against the dollar overnight after poor US employment data. However, the yen remained weak, which raised concerns that Japanese authorities might intervene again to support their currency. Data on Thursday revealed an unexpected increase in US initial unemployment claims, raising hopes for policymakers that the labor market is finally cracking. Recent labor market data has all surprised to the downside and increased bets that the Fed will cut rates in September. Moreover, there is a higher chance that the central bank will implement two rate hikes in 2024. USD/JPY key events today US UoM consumer sentiment USD/JPY technical price analysis: Bulls rest after a strong move to the 156.00 level On the technical side, the USD/JPY price has paused below the 156.00 resistance level. However, the bullish bias is strong because it trades above the 30-SMA with the RSI in the bullish region above 50. This pause comes after an impulsive move that saw the price break out of its bearish channel. Bulls have paused to rest as the 30-SMA catches up with the price. When it does, USD/JPY will likely break above 156.00 to retest the 158.00 resistance level. The bullish bias will remain if the price stays above the 30-SMA. https://www.forexcrunch.com/blog/2024/05/10/usd-jpy-price-analysis-yen-slips-on-weaker-consumer-spending/
2024-05-10 08:51
The UK economy expanded by the most in almost three years in Q1. US data revealed a significant jump in initial jobless claims to an 8-month high. One more BoE policymaker voted for a rate cut. The GBP/USD outlook shows a surge in bullish momentum as the pound strengthens after better-than-expected GDP data. At the same time, the dollar was weak after another poor employment report. Data on Friday showed that the UK economy expanded the most in almost three years in Q1. This ends the shallow recession experienced in the second half of 2023. The GDP expanded by 0.6% in the first quarter of 2024. Meanwhile, data on Thursday from the US revealed a significant jump in initial jobless claims to an 8-month high. This confirmed the recent view that the labor market was cooling, leading to a sharp decline in the dollar. Moreover, the unemployment claims report came after poor nonfarm payrolls figures, revealing a bigger-than-expected drop in employment in April. Furthermore, other data showed that US jobless claims fell to a 3-year low in March. All these reports have raised confidence in the market that the US labor market is easing. As a result, there will be less inflationary pressure, allowing the Fed to cut interest rates. For this reason, investors are back to pricing in two Fed rate cuts in 2024. Elsewhere, the pound fell after the Bank of England policy meeting, where the central bank held rates at 5.25%, as expected. One more policymaker voted for a rate cut, indicating growing confidence that inflation will reach the central bank’s target. Moreover, Governor Bailey said he was optimistic that things were moving in the right direction. GBP/USD key events today US consumer sentiment report GBP/USD technical outlook: Bullish momentum cracks 30-SMA On the technical side, the GBP/USD price is on the brink of breaking above the 30-SMA. Meanwhile, the RSI has crossed above 50, showing a shift in sentiment to bullish. This comes after the price failed to break below the 0.5 Fib retracement level. Bulls reversed the move with a bullish engulfing candle. If the price closes above the SMA, it will confirm a bullish takeover. Moreover, it would allow the price to target and retest the 1.2600 key resistance level. A break above this level would make a higher high and strengthen the bullish bias. https://www.forexcrunch.com/blog/2024/05/10/gbp-usd-outlook-pound-rallies-on-the-heels-of-strong-gdp-data/
2024-05-09 10:01
US inflation has stalled above the central bank’s target. Investors are waiting to see if US inflation will surprise again. China’s exports and imports improved in April as domestic and overseas demand improved. The AUD/USD outlook is relatively flat as the dollar gains ahead of the US inflation report, while the Aussie stands firm thanks to encouraging data from China. The greenback is gaining momentum as markets gear up for next week’s inflation figures, which could change the outlook for Fed rate cuts. In recent months, the US has released hotter-than-expected inflation numbers, leading to the conclusion that inflation has stalled above the central bank’s target. As a result, policymakers have lost confidence in the progress to lower inflation, leading to confusion about the timing of rate cuts. However, the last jobs report increased expectations that the Fed might start cutting interest rates in September. Next week, investors will wait to see if inflation will surprise again. A positive surprise could revive the view that the Fed might cut only once or not at all in 2024. Such an outcome would be bullish for the dollar. However, if the recent weakness in the labor market reflects in the inflation report, the chances of a cut in September will increase. Meanwhile, data from China on Thursday showed the economy was improving. Consequently, the Yuan and the Australian dollar gained. As domestic and overseas demand increased, China’s exports and imports improved in April. Clearly, recent policy support measures have improved economic activity in the fragile economy. Notably, exports expanded by 1.5% on an annual basis in April. Similarly, imports for April expanded by 8.4%, which was well above forecasts for an increase of 4.8%. AUD/USD key events today US initial jobless claims US 30-y Bond auction AUD/USD technical outlook: Bullish bias holds despite a break below the 30-SMA On the technical side, the AUD/USD price is trading in a tight range near the 0.6575 key level. Moreover, it trades below the 30-SMA with the RSI slightly below 50, indicating a bearish sentiment. However, the larger bullish trend remains intact because the price still trades above the support trendline. If it fails to break below this trendline, it will reverse and target the 0.6650 level. On the other hand, if it breaks below the trendline, it would confirm a new bearish bias. This would allow the price to reach the 0.6475 support level. https://www.forexcrunch.com/blog/2024/05/09/aud-usd-outlook-aussie-stabilizes-on-firm-chinese-data/
2024-05-09 08:26
Next week’s US inflation report will shape the outlook for Fed rate cuts. Tokyo has spent approximately $60 billion to try and support its weak currency. BoJ policymakers were increasingly hawkish at the April meeting. The USD/JPY forecast leans bullish as the dollar strengthens ahead of next week’s US inflation data. Markets believe the economy is still robust, which could mean another upbeat inflation report. Meanwhile, hawkish sentiments from BoJ policymakers at their last meeting helped briefly support the yen. Market participants are getting ready for the US inflation report, which will shape the outlook for Fed rate cuts. The last report led to a significant rally in the dollar that weighed on the yen and had Japanese authorities concerned. Another report could return the pair to the $160.00 level and trigger another intervention. In the last week, Tokyo has spent approximately $60 billion to try and support its weak currency. If inflation remains persistent, there is a high chance that investors will push back the timing for the first Fed rate cut. On the other hand, a surprise decline would be a big relief for the Fed, especially after the recent jobs report. It would solidify bets that the central bank will cut interest rates in September. Elsewhere, minutes from the Bank of Japan’s last meeting in April revealed that policymakers were increasingly hawkish. As a result, experts believe the next rate hike could come in June or July. Although this strengthened the yen, it was only brief as it quickly resumed its decline against the dollar. USD/JPY key events today US unemployment claims US 30-y Bond auction USD/JPY technical forecast: Channel breakout confirms bullish reversal On the technical side, the USD/JPY price has broken out of its bearish channel and is quickly approaching the 156.00 key resistance level. The breakout shows that bulls have taken control. At the same time, the price trades above the 30-SMA with the RSI above 50, supporting the new bullish bias. Bulls gained confidence when the price broke above the channel resistance. However, after such a strong rally, the price might pause at the 156.00 key resistance. This would allow it to pull back and retest the 30-SMA as support before continuing higher. Given the new bullish bias, the price might break above the 156.00 level to retest the 158.00 key resistance level. https://www.forexcrunch.com/blog/2024/05/09/usd-jpy-forecast-dollar-firms-as-investors-prepare-for-us-cpi/
