2024-04-25 09:40
Markets expect the Bank of Japan to maintain rates tomorrow. The yen will remain weak if Japan maintains its gradual rate hike outlook. As the USD/JPY pair continues to climb, the risk of intervention grows. The USD/JPY outlook remains bullish as the yen weakens in anticipation of the Bank of Japan’s policy decision. However, investors are treading cautiously as the risk of intervention looms large following the recent surge above the $155 level. On Thursday, the Bank of Japan started its policy meeting to decide on interest rates. When the meeting ends tomorrow, markets expect the central bank to hold rates. However, policymakers might give a hawkish message about the outlook for interest rates. Notably, BoJ governor Kazuo Ueda has assumed a more hawkish tone in recent weeks due to the sharp decline in the yen. He has repeatedly said that the central bank might hike rates to support the weak currency. A weak yen drives trend inflation as it increases import prices. However, if the Bank of Japan maintains rates, the fundamentals supporting the yen’s decline will remain. The yen has weakened significantly due to the interest rate gap between the US and Japan. Therefore, as long as Japan maintains its gradual rate-hike outlook, the yen will remain weak. Meanwhile, as Japan’s currency plummets, officials in the country have stepped up warnings of a looming intervention. Although such remarks kept it in a tight range below $155, the effect eventually faded. Markets were seeing this level as the line in the sand. However, they have now pushed it up to $160. As the USD/JPY pair continues to climb, the risk of intervention grows. USD/JPY key events today Advance US GDP US jobless claims Pending US home sales USD/JPY technical outlook: New swing high signals bullish momentum surge On the charts, the USD/JPY price has detached from the 30-SMA and made a new swing high, signalling a surge in bullish momentum. This can also be seen in the RSI, which is deep in overbought territory. The price trades in a bullish channel heading for the resistance line. However, bulls must break above the 156.00 key psychological level to reach channel resistance. -Are you looking for automated trading? Check our detailed guide- After such a strong bullish surge, the price might pause at 156.00, where bears might emerge for a pullback. Therefore, the USD/JPY pair might retest the 30-SMA before continuing higher or reversing the trend. https://www.forexcrunch.com/blog/2024/04/25/usd-jpy-outlook-yen-loses-ground-ahead-of-boj-statement/
2024-04-25 09:39
Canada released data showing a drop in retail sales in February. There is more pressure on the Bank of Canada than on the Fed to cut interest rates. A rebound in oil prices supported the Canadian dollar. The USD/CAD forecast points downward as the Canadian dollar rebounds following a dip triggered by disappointing economic data. Notably, the rebound came from a recovery in oil prices as investors weighed the risk of an escalation in Middle East tensions. On Wednesday, Canada released data showing a drop in retail sales in February. Sales fell by 0.1% compared to an expected increase of 0.1%. As a result, markets raised bets that the Bank of Canada will cut rates in June. This led to a significant decline in the Canadian dollar, allowing the USD/CAD pair to rise. However, the pair is now falling after the initial reaction to the news. The policy and economic outlook divergence between Canada and the US continues to grow. Unlike Canada, the US’s last retail sales report beat forecasts to show a strong economy with robust consumer spending. Meanwhile, consumer spending has declined in Canada, and the economy is weaker. At the same time, inflation in the US has stalled its decline, while that in Canada continues to ease. Consequently, there is more pressure on the Bank of Canada than the Fed to cut interest rates. Investors believe the BoC will cut rates in June or July. Meanwhile, the Fed might implement the first rate cut in September. Elsewhere, a rebound in oil prices supported the Canadian dollar on Thursday. Oil recovered after a big drop in the previous session caused by US demand concerns. Although Middle East tensions have eased, the risk of an escalation remains and will likely keep oil prices high. USD/CAD key events today US advance GDP q/q US unemployment claims US pending home sales m/m USD/CAD technical forecast: Trendline break signals a new downtrend On the technical side, the USD/CAD price has broken below its bullish trendline, which confirms a bearish reversal. This comes after the bullish move paused at the 1.3840 key resistance level. Bears took over by first breaking below and retesting the 30-SMA. They confirmed a reversal when the price broke below the trendline and the 1.3700 key level. -Are you looking for automated trading? Check our detailed guide- At the same time, the RSI now trades below 50 in bearish territory, supporting a downtrend. Bears are now targeting the next barrier at 1.3550. https://www.forexcrunch.com/blog/2024/04/25/usd-cad-forecast-data-driven-rise-fades-amid-weaker-dollar/
2024-04-25 07:06
The bias is bearish as long as it stays within the descending pitchfork’s body. The US data should be decisive today. A new higher high activates an upward movement. The gold price is trading in the green at $2,319 at the time of writing. The precious metal is struggling to come back higher after the last sell-off. However, the downside pressure remains high as the US dollar stays bid. Moreover, the Australian CPI q/q reported a 1.0% growth versus the 0.8% growth estimated, while the CPI y/y rose by 3.5%, exceeding the 3.4% growth forecasted. Gold is in a corrective phase, and it could extend it. Even though Canadian Retail Sales reported a 0.1% drop versus a 0.1% growth estimate, while Core Retail Sales registered a 0.3% drop, the traders expected a 0.0% growth. Also, the US Durable Goods Orders came in better than expected yesterday, while Core Durable Goods Orders disappointed a little. Today, the US economic data should have a significant impact. The Advance GDP may announce 2.5% growth after the 3.4% growth in the previous reporting period. Unemployment Claims could jump from 212K to 214K, while Pending Home Sales indicator may report a 0.3% growth. In addition, the Advance GDP Price Index, Goods Trade Balance, and Prelim Wholesale Inventories figures will also be published. The gold price dropped as low as $2,291 in the short term, where it found demand again. In the short term, the price moves sideways between this new low and the $2,334 level. -Are you looking for automated trading? Check our detailed guide- The metal has failed to reach the median line (ml) of the descending pitchfork and the weekly S2 (2,284), signaling exhausted sellers. Still, as long as it stays within the descending pitchfork’s body, the bias remains bearish. False breakouts through this upside obstacle may announce a new sell-off. Only taking out the upper median line (uml) and making a new higher high could activate an upward movement. https://www.forexcrunch.com/blog/2024/04/25/gold-price-near-key-dynamic-resistance-advance-gdp-eyed/
2024-04-24 12:35
Staying above the median line indicates further growth. The US and Canadian figures should bring high action later today. The EUR/USD pair tries to confirm its breakout. The EUR/USD price touched 1.0714 today, registering a new weekly high. However, the pair failed to stay above the 1.07 psychological level and is now trading at 1.0686 at the time of writing. The US dollar rebounded in the short term. That’s why the currency pair slipped lower. However, the greenback remains sluggish as the US Flash Services PMI dropped from 51.7 points to 50.9 points, though the traders had expected a potential growth of 52.0 points, confirming a slowdown in expansion. Meanwhile, Flash Manufacturing PMI dropped unexpectedly from 51.9 to 49.9 points, announcing contraction again in this sector. On the other hand, the Eurozone, French, and German services sectors confirmed further expansion, so the Euro rallied. Today, the EUR received a helping hand from the German Ifo Business Climate and jumped from 87.8 points to 89.4 points, above the 88.9 points expected. Later today, the US Durable Goods Orders are expected to report a 2.5% growth, compared to the estimated 1.3% growth, while Core Durable Goods Orders could announce a 0.3% growth for the second month in March. Furthermore, Canadian retail sales could have an impact on the USD. Technically, the EUR/USD price rallied after invalidating the breakdown below the weekly pivot point of 1.0647. It has jumped above the descending pitchfork’s median line (ml) and the R1 of 1.0694. These represented upside obstacles, and the price tried to confirm the breakout by retesting these levels. -Are you looking for automated trading? Check our detailed guide- Staying above the median line may announce an upside continuation ahead. On the contrary, stabilizing below this line may signal a deeper drop towards the weekly pivot point of 1.0647 again. https://www.forexcrunch.com/blog/2024/04/24/eur-usd-price-retraces-below-1-07-as-dollar-regains/
2024-04-24 10:12
Australia’s CPI increased by 1% in Q1, beating estimates for an increase of 0.8%. There is a 4% chance of an RBA hike in August. PMI data showed a decline in US business activity in April. The Australian dollar is rising, propelled by unexpectedly high inflation figures, painting a bullish picture for the AUD/USD forecast. After this report, investors have lowered their expectations for a Reserve Bank of Australia rate cut. On the other hand, the dollar was weak after PMI data revealed a slowdown in the economy. Investors abandoned hopes for an RBA cut this year after Australia’s Consumer Price Index beat forecasts. In Q1, the CPI increased by 1%, beating estimates for an increase of 0.8%. Notably, the increase came from stubborn service cost pressures. After the report, there was a sharp decline in RBA rate cut expectations, with some even pricing a 4% chance of a hike in August. The RBA has remained mostly cautious about cutting rates due to the still-tight labor market. However, there was some hope that the central bank would start sometime this year. This latest report has changed that outlook, as the RBA might not cut rates in 2024. As a result, the Aussie has a slight edge over other major currencies, given the RBA might cut rates after the Fed. Meanwhile, the AUD/USD pair got additional support from a weaker US dollar. On Tuesday, PMI data showed a decline in US business activity in April, which relieved the Fed. Any sign of weaker economic demand gives policymakers more confidence that inflation will decline. AUD/USD key events today Investors will keep absorbing the impact of Australia’s CPI report as no major reports are coming from the US. AUD/USD technical forecast: Bulls set their sights on the 0.6625 resistance On the technical side, the AUD/USD price sits well above the 30-SMA, showing bulls are in the lead. Moreover, the RSI trades near the overbought region, supporting solid bullish momentum. Bears lost market control when they failed to close below the 0.6400 key support level. Instead, the price made a large wick, signaling a rejection of lower prices. -Are you looking for automated trading? Check our detailed guide- At the same time, the RSI made a bullish divergence that revealed weaker bearish momentum. With bulls in the lead, the price has breached the 0.6500 key psychological level. They might pause at this level for a while before targeting 0.6625. https://www.forexcrunch.com/blog/2024/04/24/aud-usd-forecast-rallies-as-rate-cut-bets-ease-after-hot-cpi/
2024-04-24 08:33
Britain’s composite PMI increased to 54.0 in April from 52.8 in March. The BoE’s chief economist, Huw Pill, said that rate cuts remain some way off. US business activity cooled significantly, leading to a decline in the dollar. The pound’s rise following the release of encouraging PMI data on Tuesday sparked a bullish outlook for the GBP/USD price analysis. Adding to the momentum, investors have dialed down their expectations of a Bank of England rate cut, spurred by hawkish comments. Meanwhile, the dollar was weak after PMI data revealed a decline in business activity in the US. Britain’s composite PMI increased to 54.0 in April from 52.8 in March, indicating a recovery in the economy. The rebound from its shallow recession is much faster than economists expected. Moreover, this might drive up inflation and wages, leading to a more cautious outlook for the Bank of England’s policy outlook. Currently, markets expect the first rate cut in June or August. Notably, the BoE’s chief economist Huw Pill said that rate cuts remained some way off, emphasizing caution despite the recent decline in inflation. As a result, there was a drop in rate-cut bets. Meanwhile, in the US, the composite PMI fell to 50.9 in April from 52.1 in March, indicating a slowdown in the economy. Such downbeat data comes as a relief to Fed policymakers as it reflects a drop in demand. However, investors will wait for Friday’s core PCE inflation report to shape the Fed’s rate-cut outlook. Markets currently predict a 73% likelihood that the central bank will cut in September. GBP/USD key events today Investors are not looking forward to high-impact US or UK reports today. Therefore, they will keep digesting the PMI data. GBP/USD technical price analysis: Bullish momentum pauses at the 0.382 Fib level On the technical side, the GBP/USD price has broken above the 30-SMA, indicating a bullish sentiment shift. Similarly, the RSI has broken above 50 and now favors bullish momentum. This shift came after the price paused at the 1.2301 key level. At that point, the RSI made a bullish divergence that showed weakness in the downtrend. As a result, bears gave up control when the price broke above the SMA. -Are you looking for automated trading? Check our detailed guide- However, bulls are now facing the 0.382 Fib retracement level. This might trigger a pullback to retest the SMA as support before the price targets the 1.2550 key resistance level. https://www.forexcrunch.com/blog/2024/04/24/gbp-usd-price-analysis-pound-surges-on-positive-pmi/
