2024-04-12 10:09
An ECB poll of economists confirmed that inflation in the Eurozone will decline to 2%. The ECB held rates on Thursday and signaled the first rate cut in June. The Fed will remain cautious about rate cuts. The EUR/USD price analysis reveals a compelling downtrend, with the euro declining amid optimism that Eurozone inflation is set to hit the coveted 2% mark. Meanwhile, the dollar strengthened as investors scaled back rate cut expectations after the US inflation report. On Friday, an ECB poll of economists confirmed that inflation in the Eurozone would decline to 2% and stay there. Markets took this as another sign that the ECB will be ready to cut interest rates in June, well before the Federal Reserve. The ECB held rates on Thursday and signaled the first rate cut in June. ECB president Christine Lagarde noted that inflation was on a clear path down. Therefore, it will be appropriate to start cutting interest rates. Moreover, she said that the ECB was data-dependent and not Fed-dependent. Consequently, they will not wait for the Fed to start the rate-cutting cycle. The recent US inflation data has delayed the Fed’s rate-cut cycle significantly, with investors now expecting it to start in September. Furthermore, the US economy is performing much better than the Eurozone economy. For six quarters, the Eurozone economy has stagnated. Additionally, the labor market has slowed down. Therefore, the forces that have driven inflation are subsiding. On the other hand, the US economy has remained resilient, and the labor market is hot, keeping inflation high. Consequently, the Fed will remain cautious about rate cuts. Nevertheless, there is uncertainty about the ECB’s policy outlook after June, as the ECB will likely monitor progress on US inflation. EUR/USD key events today US preliminary UoM consumer sentiment EUR/USD technical price analysis: Price continues downward spiral below 1.0725 On the charts, the EUR/USD price is in freefall. Since the false trendline breakout, the price has broken below several major support levels. Recently, it broke below the 1.0725 support to make a lower low. Consequently, the price now sits far below the 30-SMA. Additionally, the RSI is deep in bearish territory, supporting a bearish bias. Bears will likely soon reach the 1.414 Fib extension level, where the decline might pause or pull back. A pullback would allow the price to retest the 30-SMA resistance before continuing its downtrend. https://www.forexcrunch.com/blog/2024/04/12/eur-usd-price-analysis-euro-tumbles-amid-ecbs-cut-in-june/
2024-04-12 10:01
The bias remains bullish despite minor drops. The bearish formation is far from being confirmed. A new lower low activates a corrective phase. The USD/JPY price climbed as high as 153.38 today, marking a fresh high. Now, the pair has retreated a little and is trading at 153.23 at the time of writing. The bias remains bullish despite minor retreats. The dollar’s strong rally after the US inflation figures have weighed down the Japanese yen. The currency pair stays higher even though the PPI reported only a 0.2% growth versus the 0.3% growth estimated, while the Core PPI rose by 0.2% as expected. The US dollar received a helping hand only from the Unemployment Claims. The indicator came in at 211K, compared to 216K estimated. Today, the Yen took a hit from the Japanese Revised Industrial Production, which reported a 0.6% drop, more versus the 0.1% drop forecast. Later, the US economic data could bring life to the USD/JPY pair. The Prelim UoM Consumer Sentiment may drop from 79.4 points to 79.0 points, which could be bad for the greenback. The Prelim UoM Inflation Expectations and Import Prices data will be released as well. The USD/JPY price continues to challenge the weekly R3 of 153.24. It stands as a static resistance. The former high of 153.31 represents an upside obstacle as well. As you can see on the hourly chart, the price action has developed a potential Rising Wedge pattern. Still, this formation is far from being confirmed. The bias is bullish as long as it stays above the minor uptrend line and the 152.75 former low. So, further growth is favorable. Only a new lower low, dropping and closing below 152.75, could activate a larger correction. https://www.forexcrunch.com/blog/2024/04/12/usd-jpy-price-spikes-up-showing-exhaustion-signs/
2024-04-12 08:32
The UK economy grew in February, indicating a gradual exit from its shallow recession. After the US inflation report, investors have changed their outlook for Fed rate cuts. Traders pushed back the timing for the first BoE cut to August. The current narrative in the GBP/USD outlook paints a bearish picture. Despite glimpses of growth in the UK economy for the second consecutive month, the pound finds itself locked in a downward spiral against a resurgent dollar. For the past few days, the dollar has rallied after the CPI report confirmed fears that inflation has stalled. The UK economy grew in February, indicating a gradual exit from its shallow recession. However, investors mostly ignored the report as they continued digesting recent US inflation data. After the US inflation report, investors have changed their outlook for Fed rate cuts. Before the report, there was an over 50% chance that the Fed would cut rates by June. However, that has changed with expectations for the first cut now in September. Such a significant shift led to a rally in yields and the dollar, putting pressure on the pound. For months, the GBP/USD pair has had an edge over most G10 currencies due to a hawkish Bank of England. However, the playing field has changed. The Fed is now in a more hawkish position than the BoE, given the recent data. Meanwhile, the Bank of England has grown more dovish as inflation in the UK has declined at a much faster-than-expected rate. Investors are now fixing their eyes on next week when the UK will release inflation and labor market data. Nonetheless, after the US inflation report, traders pushed back the timing for the first BoE cut from June to August. This is still ahead of the Fed, which is weighing on the GBP/USD price. GBP/USD key events today US consumer sentiment GBP/USD technical outlook: Channel breakout On the technical side, the GBP/USD price has broken out of its bullish channel and is on a solid downtrend. The trend reversed when the price met the 1.2700 key resistance level, where bears took control with a bearish engulfing candle. Moreover, the price broke below the 30-SMA and the RSI below 50. The strong bearish momentum continued until the price broke below the channel support and the 1.2551 support level. The bears are now targeting the 1.2500 support level, where the decline might pause for some time. https://www.forexcrunch.com/blog/2024/04/12/gbp-usd-outlook-pound-slides-despite-uk-economic-growth/
2024-04-11 09:45
Headline US inflation rose 0.4% monthly and 3.5% on an annual basis. Investors now expect the first Fed cut in September. Governor Tiff Macklem said that the BoC will likely cut rates in June. The USD/CAD outlook shines brighter with bullish prospects as the outlook for rate cuts between Canada and the US continues to diverge. On Wednesday, the US released the CPI report showing a jump in inflation. Meanwhile, the Bank of Canada signaled the start of rate cuts in June. As more data comes in, it is clear that the Bank of Canada will be ready to cut rates earlier than the Fed. Notably, annual and monthly US inflation figures came in higher than expected, indicating a pause in the downtrend. Headline inflation rose 0.4% monthly and 3.5% on an annual basis. Consequently, rate-cut bets fell sharply, with investors now expecting the first Fed cut in September. Furthermore, there is a chance the Fed will only cut rates two times this year. Fed policymakers have been waiting to assess data for confidence that inflation will reach the 2% target. However, after three months of hot figures, policymakers and investors have lost confidence. Moreover, the labor market has remained resilient, with the last jobs report beating forecasts. Meanwhile, the situation in Canada is the complete opposite. Data on the labor market revealed a deteriorating economy that is putting pressure on the Bank of Canada to start cutting interest rates. At the policy meeting on Wednesday, the BoC held rates at 5% as expected. However, Governor Tiff Macklem said that the central bank would likely cut rates in June if inflation continues easing. USD/CAD key events today US core PPI m/m US PPI m/m US unemployment claims US 30-y bond auction USD/CAD technical outlook: Channel breakout signals momentum surge On the charts, the USD/CAD price has broken above its bullish channel, showing a surge in momentum. Consequently, this might be the start of a stronger bullish trend. The rise in momentum came when the price paused at the 30-SMA support. From here, it made a bullish engulfing candle that broke above the channel resistance. At the same time, the RSI rose to the overbought region. Currently, the price has paused at the 1.3700 key resistance level. It might consolidate below this level as the SMA catches up before breaking above. https://www.forexcrunch.com/blog/2024/04/11/usd-cad-outlook-bullish-as-boc-fed-divergence-widens/
2024-04-11 09:19
The downside pressure is high after escaping from the flag pattern. The pivot point is seen as a potential target. The ECB Press Conference and the US data should move the rate. The gold price turned to the downside after reaching today’s high of $2,346. The metal is trading at $2,332 at the time of writing. The dollar’s rally boosted the greenback in the last trading session and weighed down the XAU/USD. Greenback’s further growth could push the yellow metal lower in the short term. However, don’t forget that the bias is still bullish despite minor corrective downsides. Yesterday, the XAU/USD registered sharp movements in both directions, as expected after the US inflation data was released. As indicated in the previous analyses, higher US inflation should lift the USD and drag Gold lower. The CPI announced a 0.4% growth in March, beating the 0.3% growth estimated. CPI y/y registered a 3.5% growth, exceeding the 3.4% growth forecasted, while Core CPI reported a 0.4% growth versus the 0.3% growth expected. Furthermore, the BOC and RBNZ maintained the monetary policy in the April meeting. Today, the ECB is expected to keep the Main Refinancing Rate at 4.50%. The ECB Press Conference should shake the markets today. In addition, the US will release the PPI, Core PPI, and Unemployment Claims data. From the technical point of view, the XAU/USD found resistance at the weekly R1 (2,364), and now it has escaped from the flag pattern, signaling a corrective phase. In the short term, it has tried to recover after the last sell-off, but the downside pressure seems high. Still, only a new lower low, taking out the immediate lows, could activate a larger drop toward the weekly pivot point of 2,296. A valid breakdown through this level validates a downside continuation. https://www.forexcrunch.com/blog/2024/04/11/gold-price-tumbles-after-us-inflation-focus-on-us-ppi/
2024-04-11 08:31
The US released yet another bigger-than-expected reading on inflation. Investors pushed back the timing of the first Fed rate cut to September. Markets are almost entirely pricing in the first ECB rate cut in June. Hot inflation figures shifted the EUR/USD forecast to bearish as the dollar gained due to a decline in rate cut expectations. Meanwhile, investors are awaiting the ECB policy meeting, during which the central bank might signal the start of rate cuts in June. On Wednesday, the US released yet another bigger-than-expected reading on inflation. This was the third month of high price increases, suggesting that the progress in inflation had stalled. Inflation rose by 0.4% in March, beating forecasts of a 0.3% increase. Furthermore, the inflation report came after an upbeat jobs report, showing a robust economy. Demand remains high in the US. Therefore, the Fed must maintain high interest rates for longer. Otherwise, inflation might get stuck at levels above the central bank’s target. After the report, investors pushed back the timing for the first rate cut to September. Additionally, investors now only expect two rate cuts in 2024 as opposed to three. Meanwhile, the outlook for the ECB is quite different. Markets are almost entirely pricing in the first rate cut in June. Inflation in the Eurozone will likely reach the 2% target by the end of the year. At the same time, the economy has slowed down significantly compared to the US. Therefore, there is more pressure on the ECB to cut rates. However, the ECB will likely maintain current rates at the policy meeting and signal the start of rate cuts. EUR/USD key events today European Central Bank policy meeting US PPI report US unemployment claims US 30-y bond auction EUR/USD technical forecast: Price falls sharply after false trendline break On the technical side, the EUR/USD price has fallen sharply after finding strong resistance at the 1.0875 key level. The price now trades well below the 30-SMA with the RSI in the oversold region, showing massive bearish momentum. Before the decline, bulls attempted to break above a strong resistance trendline. However, the price quickly reversed after making a bearish, engulfing candle. Consequently, this move turned out to be a false breakout, leading to a steep decline. The price broke below the 1.0800 key support and is now testing 1.0725. However, after such a strong move, it might pull back before continuing lower. https://www.forexcrunch.com/blog/2024/04/11/eur-usd-forecast-plummets-after-upbeat-us-cpi-eyes-on-ecb/
