2024-04-23 12:34

Data on Tuesday revealed a big jump in the Eurozone’s services sector. ECB’s Luis de Guindos confirmed the June rate cut. Any policy divergence between the Fed and the ECB could weaken the euro. The EUR/USD price analysis leans bullish as the euro gains ground on upbeat PMI data. Despite this positive momentum, investor focus remains on the probability of the European Central Bank implementing its first rate cut in June. Data on Tuesday revealed a big jump in the Eurozone’s services sector, which made up for a decline in manufacturing activity. Therefore, the composite PMI jumped, indicating a return to growth in the Euro area. Despite the recovery in the economy, markets still expect the ECB to start implementing rate cuts ahead of the Fed in June. Notably, ECB Vice President Luis de Guindos confirmed on Tuesday that the ECB will lower rates in June. However, he also said the central bank should exercise caution after June and wait for signals from the Federal Reserve. Clearly, policymakers are worried about a possible policy divergence with the Fed. Market participants have significantly pushed back expectations for rate cuts in the US after recent upbeat inflation data. Moreover, policymakers have shifted their tone from dovish to bullish, saying they might prolong higher interest rates. Therefore, markets expect fewer cuts, which might start in the fourth quarter. This is well after the ECB’s June cut. Any divergence with the Fed could cause a significant decline in the euro, which might undo some of the ECB’s work. A weaker euro would increase import costs and drive inflation. As such, the ECB will likely be patient after the first cut to see what the Fed will do. EUR/USD key events today US flash manufacturing PMI US flash services PMI EUR/USD technical price analysis: Weaker push above 30-SMA On the technical side, the EUR/USD price has started trading above the 30-SMA, showing bulls have taken over. This comes after a pause at the 1.618 Fib extension level and a bullish divergence in the RSI. -Are you looking for automated trading? Check our detailed guide- However, the new move is weak because the price is sticking close to the SMA. At the same time, it is making small-bodied candles, showing weak momentum. If bulls find their footing above the SMA, they will retest the 1.0725 key level. Otherwise, the downtrend will continue below 1.0600. https://www.forexcrunch.com/blog/2024/04/23/eur-usd-price-analysis-euro-finds-respite-on-better-pmi/

2024-04-23 10:07

Escaping from the up channel announced a potential leg down. Taking out the immediate downside obstacles opens the door for more declines. The US data could change sentiment in the short term. The gold price tumbled after failing to retest the new all-time high of $2,431 and is now trading at $2,294 at the time of writing. The bias has turned bearish in the short term. So, the XAU/USD could hit new lows despite a slightly weaker dollar. Today, the fundamentals should be decisive and may shift the sentiment. The French Flash Services PMI came in at 50.5 points above the 48.9 points expected versus 48.3 points in the previous reporting period, confirming expansion. In comparison, German Flash Services PMI jumped from 50.1 points to 53.3 points, beating 50.6 estimates, announcing further expansion. On the contrary, the French Flash Manufacturing PMI and German Flash Manufacturing PMI remained deep in the contraction territory. Furthermore, the Eurozone and UK Flash Services PMI came in better than expected, while the Flash Manufacturing PMI came in worse than expected. Later, the US data should move the markets. Flash Manufacturing PMI and Flash Services PMI indicators are expected to come in better than the previous reporting period. In addition, the New Home Sales and Richmond Manufacturing Index data will be released as well. Only positive US figures could save the greenback from the downside. From a technical point of view, gold entered a corrective phase after retesting the major uptrend line. The price escaped from the up channel, confirming a potential leg down. -Are you looking for automated trading? Check our detailed guide- Taking out the weekly pivot point at $2,378 opened the door for a larger drop. Now, it has ignored the weekly S1 (2,338) and is almost to hit the weekly S2 (2,284) and the median line (ml). These represent important downside obstacles. Taking out these support levels validates more declines ahead. https://www.forexcrunch.com/blog/2024/04/23/gold-price-looking-for-a-deeper-correction-below-2300/

2024-04-23 09:59

There is a bigger chance of intervention after Japan meets with the US and South Korea. The BoJ is ready to hike rates to support the yen. The yen’s decline is closely tied to the recent shift in the outlook for Fed rate cuts. The USD/JPY outlook leans slightly bearish as the yen responds to stern warnings against its decline. Japanese authorities made clear on Tuesday their readiness to intervene. They signaled a determined stance to halt any further depreciation of their currency. Japan’s finance minister, Shunichi Suzuki, noted a greater likelihood of intervening in the market after the US and South Korea meeting. Notably, the three countries met last week to discuss their currencies’ weakening and find a way forward. At the same time, Bank of Japan governor Kazuo Ueda said on Tuesday that the central bank will be ready to hike interest rates if trend inflation reaches its 2% target. The governor has repeatedly said that a weaker yen increases the cost of living by hiking import prices. Therefore, any further weakness in the currency could trigger an intervention. The last time Japan intervened in the market was in 2022. Markets are again on the edge, expecting an intervention since the yen has weakened to a 34-year low. Moreover, policymakers insist that the recent weakness does not reflect fundamentals in the market. However, the yen’s decline is closely tied to the recent shift in the outlook for Fed rate cuts. Therefore, although an intervention might support the yen, it will likely only be temporary. A more significant reversal in the pair can only come from a sudden shift in the policy outlook in Japan or the US. USD/JPY key events today Flash Manufacturing PMI Flash Services PMI USD/JPY technical outlook: Bulls show signs of fatigue below the 155.02 On the technical side, USD/JPY has reached a new high, slightly below the 155.02 critical level. However, it is clear that bullish momentum has weakened. Notably, the price sticks closer to the 30-SMA, indicating a much shallower move. At the same time, the RSI has made a bearish divergence, signalling weaker bullish momentum. -Are you looking for automated trading? Check our detailed guide- Therefore, there is a chance the trend might soon reverse. Bears must break below the 30-SMA and the bullish trendline to confirm a reversal. If this happens, the price will likely drop to the 153.00 key support level. https://www.forexcrunch.com/blog/2024/04/23/usd-jpy-outlook-intervention-warnings-mildly-lift-yen/

2024-04-22 10:09

On Friday, oil prices temporarily increased after the initial shock that Israel had attacked Iran. Economic data points to more upside potential for the USD/CAD pair. Markets expect the Bank of Canada to cut interest rates before the Fed. With the Canadian dollar extending its rally from last week, the USD/CAD outlook remains bearish despite a dip in oil prices. On Friday, oil prices temporarily increased after an initial shock that Israel had attacked Iran, boosting the loonie. However, the move pulled back significantly after Iran downplayed the attack. Although the USD/CAD pair has pulled back from recent peaks, economic data points to more upside potential. Therefore, the bullish trend could still be intact. Data last week revealed that Canada’s inflation eased more than expected. This put the Bank of Canada’s rate-cut outlook slightly at odds with the Federal Reserve’s. Inflation in the US has remained stubborn, beating forecasts for the past few months. As a result, policymakers have shifted their stance and are ready to keep higher interest rates for longer. Consequently, markets expect the Bank of Canada to cut interest rates before the Fed. This outlook puts the Canadian dollar in a weaker position than the US dollar. The only other thing that can strengthen the loonie is a rise in oil prices. However, at the moment, the tensions between Israel and Iran have gone down. With such calm, oil traders can focus on the demand side. Unfortunately, the outlook for demand, especially in China, remains poor and would weigh on oil prices. USD/CAD key events today Investors will watch developments in the Middle East war as neither the US nor Canada will release major reports today. USD/CAD technical outlook: Price meets support at bullish trendline On the technical side, the USD/CAD price has fallen below the 30-SMA to retest its bullish trendline. Previously, the price had traded in a steep bullish trend above the SMA that paused at the 1.3840 key level. Although sentiment has shifted to bearish, bears can only confirm a reversal if the price breaks below the trendline. Otherwise, it might act as support to push the price to new highs. -Are you looking for automated trading? Check our detailed guide- A break below the trendline and the 1.3700 key support level would allow the price to retest the 1.3550 key support level. On the other hand, if it acts as support, the price will likely break above the 1.3840 resistance level. https://www.forexcrunch.com/blog/2024/04/22/usd-cad-outlook-canadian-dollar-surges-despite-falling-oil/

2024-04-22 08:22

The risk of UK inflation stalling above the central bank’s target has dropped. UK inflation fell to 3.2% in March from 3.4% the previous month. Services inflation in the UK remained relatively high at 6.0% in March. Expectations for the GBP/USD forecast are bearish as the pound continues to decline following last week’s dovish remarks from the Bank of England. At the same time, the recent drop in Fed rate cut delays kept the dollar on the front foot. -Are you looking for automated trading? Check our detailed guide- On Friday, the BoE deputy governor noted that the risk of UK inflation stalling above the central bank’s target had dropped. Moreover, inflation might ease more than the central bank forecasted in February. Notably, these remarks followed the recent release of UK inflation data. According to the report, inflation fell to 3.2% in March from 3.4% the previous month. Although the decline was smaller than expected, policymakers welcomed it. BoE governor Andrew Bailey said that inflation in the country was falling as expected. However, service inflation in the UK remained relatively high at 6.0% in March. This might cause some policymakers to hesitate before calling for rate cuts. Another thing that might hold the Bank of England back is the outlook for Fed rate cuts. Last week, Fed Chair Powell confirmed that the central bank might need to keep a restrictive policy in place for longer. These remarks came after a series of better-than-expected economic reports from the US. Now, markets expect the Fed to start cutting interest rates in the fourth quarter. Consequently, this has led to declining expectations for rate cuts for other major central banks. GBP/USD key events today No high-impact economic reports are coming from the UK or the US today. Therefore, the pair might extend its move from Friday. GBP/USD technical forecast: Weakening below the 1.2400 barrier On the technical side, the GBP/USD price is making new lows after bears broke through the 1.2400 barrier. This decline indicates a continuation of the downtrend. However, as the price makes lower lows, the RSI has remained above its previous low, indicating a bullish divergence. This is a sign that bearish momentum has weakened. Therefore, there is a chance bulls will resurface to reverse the trend. A break above the 30-SMA would allow the price to retest the 1.2550 critical level. However, if bears regain momentum, the decline will continue to the next key support level. https://www.forexcrunch.com/blog/2024/04/22/gbp-usd-forecast-1-23-broken-following-boes-remarks/

2024-04-21 08:42

US retail sales beat forecasts, rising 0.7% in March. Fed officials became more cautious about the timing of rate cuts. Ueda said the BoJ would hike rates if yen weakness leads to high inflation. The USD/JPY weekly forecast charts a bullish course, fueled by positive US data and fading expectations for Fed rate cuts. Ups and downs of USD/JPY The USD/JPY pair had a bullish week characterized by dollar strength. The dollar had another strong week as rate cut expectations fell on upbeat data and hawkish Fed remarks. Notably, US retail sales beat forecasts, rising 0.7% in March. This followed the hot inflation and jobs figures, indicating a robust economy. As a result, Fed officials became more cautious about the timing of rate cuts. Powell avoided giving guidance, noting the high rates might stay longer. -Are you looking for automated trading? Check our detailed guide- Meanwhile, Japanese authorities continued their verbal warnings against the yen’s decline. Ueda even said the BoJ would hike rates if yen weakness leads to higher inflation. Notably, the yen briefly strengthened on Friday due to safe-haven demand amid escalating Middle East tensions. Next week’s key events for USD/JPY Next week, the US will release data on durable goods and economic growth. At the same time, investors will focus on the Bank of Japan monetary policy meeting. The core durable goods orders from the US will show the state of demand in the economy, which impacts the Fed’s rate cut outlook. High demand will keep the Fed cautious about cutting rates too soon. Moreover, the GDP report will show whether the economy has expanded. Given the economy’s resilience, there is a high chance the figures will be positive. Finally, traders eagerly await the BoJ policy meeting after Kazuo Ueda signaled a possible rate hike. USD/JPY weekly technical forecast: Bulls target 156.00 level, channel resistance On the technical side, the USD/JPY price is rising steeply after breaking above the 152.00 key level. The price was caught in a tight consolidation below this level for a long time. However, bullish momentum surged when it finally broke above. At the same time, the price is approaching the resistance line of its bullish channel, where it might reverse. This could mean retesting the 156.00 critical resistance level. However, the RSI is in overbought territory, indicating near-maximum bullish momentum. If bulls get exhausted soon, the price might reverse, break below the 22-SMA and target the channel’s support line. https://www.forexcrunch.com/blog/2024/04/21/usd-jpy-weekly-forecast-dollar-bid-amid-hawkish-fed/