2024-03-14 08:40
Data on Wednesday showed that the UK economy grew at a rate of 0.2% in January. Market participants expect the first BoE cut in June. Investors are awaiting the US Producer Price Index (PPI) report. Today’s GBP/USD forecast is slightly bullish after UK data revealed economic growth in January following a brief recession. Meanwhile, investors remained cautious ahead of more high-impact economic data from the US. Data on Wednesday showed that the UK economy grew at a rate of 0.2% in January. This came after a decline in the previous month. However, despite this positive report, rate-cut bets remained steady, with market participants now expecting the first BoE cut in June. Consequently, the pound barely rose. Notably, the shift in expectations for the first rate cut from August to June came after the UK’s recent jobs report. The employment report revealed weakness in the labor market with a surge in the unemployment rate. As a result, traders now believe the Bank of England will cut rates sooner. Previously, the pound had risen on the view that the BoE would be among the last major central banks to cut rates. However, that view has changed, making the pound vulnerable. Meanwhile, the dollar held steady ahead of more inflation data from the US. Investors are awaiting the Producer Price Index (PPI) report later today. A higher-than-expected value could strengthen the dollar, as it would likely lead to a decline in rate cut expectations. Additionally, the US will release data on retail sales, showing the state of consumer spending. GBP/USD key events today US Producer Price Index report US retail sales report US unemployment claims report GBP/USD technical forecast: Price falls below 30-SMA, threatening uptrend On the technical side, GBP/USD has broken below the 30-SMA, showing bears are challenging the bullish trend. However, bulls still maintain control as the price sticks close to the 30-SMA. At the same time, the RSI is above 50, showing bullish momentum remains strong. If bears cannot detach from the SMA, the price will likely push back above the SMA to retest the 1.2850 resistance level. Moreover, a break above 1.2850 would allow bulls to retest the 1.2900 psychological level. Consequently, the price would make a higher high, continuing the bullish trend. However, if bears take over, it will fall to retest the 1.2750 support. https://www.forexcrunch.com/blog/2024/03/14/gbp-usd-forecast-pound-recovers-on-positive-economic-growth/
2024-03-13 11:49
The US released a report on inflation showing a higher-than-expected annual figure. Toyota announced the biggest pay increase for its workers in 25 years. Ueda said Japan’s economy was recovering, but there were pockets of weakness. The USD/JPY forecast revealed a bullish sentiment as the dollar stood resilient after a surprising US inflation report. Meanwhile, the yen remained weak despite substantial pay hikes in Japan. On Tuesday, the US released a report on inflation showing a higher-than-expected annual figure. Consequently, there were doubts about whether the Fed would cut rates in June. If inflation fails to show a downtrend to the 2% target, the Fed might choose to keep interest rates high. Consequently, the dollar would remain strong. However, the outlook for rate cuts remains uncertain because the jobs report revealed weaker demand in the labor market. As a result, rate-cut bets went up. Additionally, Powell sounded more dovish in his testimony last week. However, the inflation report tells a different story. This confusion can also be seen in rate-cut bets, which only fell slightly after the inflation report. Ideally, such an upbeat report would have led to a bigger decline in rate cut expectations. On the other hand, the yen remained weak on Wednesday despite positive wage news. Notably, Toyota announced the biggest pay increase for its workers in 25 years. This is bullish for the yen, as it paves the way for the BoJ to start hiking interest rates as soon as this month. However, on Tuesday, BoJ governor Kazuo Ueda said the economy was recovering, but there were pockets of weakness. This was a poorer assessment than he gave in January, which weighed on the yen. USD/JPY key events today 30-year US Bond Auction USD/JPY technical forecast: Rebound faces strong resistance zone On the technical side, the USD/JPY pair is recovering after a recent decline to the 146.51 key level. Bulls have managed to break above the 30-SMA resistance, showing a shift in sentiment to bullish. At the same time, the RSI has crossed above 50 into bullish territory, showing stronger bullish momentum. However, the price also faces a strong resistance zone comprising the 0.382 Fib retracement and the 148.01 key level. A break above this zone would confirm a bullish reversal. However, if the price reverses to retest the 146.51 support level, the previous decline will continue lower. https://www.forexcrunch.com/blog/2024/03/13/usd-jpy-forecast-dollar-holds-firm-after-inflation-yen-weakens/
2024-03-13 10:43
A new lower low activates more declines. The median line (ml) is seen as a potential target. Tomorrow, the US data should bring high action. The EUR/USD price is trading in the red at 1.0922 at the time of writing. The pair faces resistance as the price corrects lower amid profit-taking. The US dollar turned to the upside. Yesterday, the fundamentals brought some volatility. The US CPI m/m rose 0.4% last month, matching expectations. The CPI y/y reported a 3.2% growth, beating the 3.1% growth estimated, while the Core CPI announced a 0.4% growth, exceeding the 0.3% growth expected. Higher inflation could force the Federal Reserve to maintain monetary policy. Today, Eurozone Industrial Production reported a 3.2% drop versus a 1.8% drop expected after a 1.6% growth in the previous reporting period, while the Italian Quarterly Unemployment Rate came in at 7.4% in Q4, above 7.3% expected but below 7.6% in Q3. The fundamentals should be decisive tomorrow as the US releases the PPI, Core PPI, Retail Sales, Core Retail Sales, and Unemployment Claims. Positive economic figures should boost the USD. As you can see on the hourly chart, the EUR/USD pair registered only a false breakout through the warning line (wl1), confirming buyers’ exhaustion. Now, it has turned to the downside and slipped below the upper median line (uml), representing dynamic support. The price retested this line, and now it looks under pressure again. Still, only dropping and stabilizing below the pivot point of 1.0916 and making a new lower low activates more declines. If the pair drops deeper, the ascending pitchfork’s median line (ml) is seen as a potential target. https://www.forexcrunch.com/blog/2024/03/13/eur-usd-price-may-plummet-as-us-reports-a-warm-inflation/
2024-03-13 10:24
The dollar strengthened on Tuesday after US inflation data beat forecasts. Annual US inflation rose by 3.2%. Oil fell on Tuesday after a higher-than-expected US oil production forecast. The USD/CAD price analysis reveals a subtle bullish tilt on Wednesday in response to the dollar’s resurgence after an upbeat inflation report. Simultaneously, the Canadian dollar is grappling with weakened strength amid a decline in oil prices. The dollar strengthened on Tuesday after US inflation data beat forecasts. Annual inflation rose by 3.2%, higher than economists forecast for a 3.1% increase. Meanwhile, the monthly figure rose by 0.4%. Consequently, there was a decline in rate cut expectations. Currently, there is a 67% likelihood of a rate cut at the June meeting. This is a decrease from 71% before the inflation report. The Fed will only be confident enough to start cutting rates when there is a consistent decline in inflation. However, if inflation remains stubbornly above the 2% target, it could lead to more delays in interest rate cuts. Investors will now wait to assess the US retail sales report, which shows the state of consumer spending. Retail sales have remained mostly resilient despite higher interest rates. Therefore, there is a chance this trend will continue. If it does, bets for a June cut might fall further. Meanwhile, the Canadian dollar weakened amid a decline in oil prices. Canada is a significant exporter of oil. Therefore, a decrease in oil prices leads to a weaker currency. Notably, oil fell on Tuesday after a higher-than-expected US oil production forecast. Higher production in the US leads to an increase in supply, which weighs on oil prices. USD/CAD key events today 30-year US Bond Auction USD/CAD technical price analysis: Pause after channel support retest On the technical side, USD/CAD has paused at the recently broken channel support. Bears and bulls are fighting for control at this level. However, there is a higher chance that bears will win because the indicators support a further decline in the pair. Notably, the 30-SMA is still facing down as bulls struggle to push the price higher. Meanwhile, the RSI trades slightly below 50 in bearish territory. If bears win the battle and make a lower low below the 1.3450 key support level, it will confirm the channel breakout and a new downtrend. Moreover, the price will likely fall to retest the 1.3375 support level. https://www.forexcrunch.com/blog/2024/03/13/usd-cad-price-analysis-strengthens-following-upbeat-cpi/
2024-03-12 12:11
XAU/USD escaped from an up channel, signaling an overbought situation. Taking out the pivot point activates more declines. The US inflation figures should shake the markets. The gold price climbed to $2,195 on Friday, registering a new all-time high. Now, the metal has retreated a little and is trading at $2,175 at the time of writing. The fundamentals should move today’s prices as the US releases the inflation figures. The Consumer Price Index is expected to report a 0.4% growth in February versus the estimated 0.3% growth so that CPI y/y could announce a 3.1% growth for the second month in February. Meanwhile, the Core CPI is expected to register a 0.3% growth after a 0.4% growth in January. Higher inflation should boost the greenback, as the FED should postpone a first rate cut. The Federal Reserve is expected to deliver a 75-bps cut this year. On the contrary, lower inflation should weaken the USD. Still, it remains to see how the yellow metal reacts as the price action signaled an overbought situation. XAU/USD turned to the downside ahead of the US figures. These should bring high volatility and sharp movements. Earlier, the UK reported mixed data. The Unemployment Rate jumped from 3.8% to 3.9% even if the specialists expected the rate to stay at 3.8%, Average Hourly Earnings reported a 5.6% growth, less versus the 5.7% growth estimated, while Claimant Count Change came in at 16.8K points, above the 20.3K forecasts. The XAU/USD climbed toward new highs within an up-channel pattern. The price dropped below the uptrend line, signaling exhausted buyers and an overbought. The yellow metal tested the broken uptrend line (channel’s support) and seems determined to print a corrective phase. The weekly pivot point of $2,151 is a potential downside target and obstacle. A larger downside movement could be activated only after making a valid breakdown through this support. https://www.forexcrunch.com/blog/2024/03/12/gold-price-shows-overbought-signs-ahead-of-us-cpi/
2024-03-12 10:12
British wages minus bonuses grew much slower than expected. Investors expect a bigger 74bps of cuts by the BoE this year. Investors are preparing to receive the US CPI report showing the state of consumer inflation. This Tuesday, the GBP/USD price analysis takes a bearish turn as soft UK labor market data fuels BoE rate cut bets. Meanwhile, the dollar held steady ahead of the US Consumer Price Index (CPI) report, impacting the Fed’s rate cut decision. Notably, data on Tuesday revealed that British wages minus bonuses grew much slower than expected in the three months to January. At the same time, the unemployment rate unexpectedly increased. This report raised hopes that the Bank of England will start cutting rates this year. As a result, the pound slipped, pulling back sharply from recent highs. The recent rally in the pound came as traders gained confidence that the Fed would cut rates ahead of the BoE. Markets believe the BoE will be among the last major banks to cut rates. As a result, the pound has strengthened due to the divergence in policy outlooks. However, after the jobs data, investors expect a bigger 74bps of cuts by the BoE this year. This increase from 67bps before the data brings it closer to the Fed’s 75bps of cuts. This means that the pound is losing some of its edge. At the same time, investors are preparing to receive the US CPI report showing the state of consumer inflation. A higher-than-expected figure could lower Fed rate cut expectations. Meanwhile, a decline in inflation might raise rate-cut bets. GBP/USD key events today US Core CPI m/m US CPI m/m US CPI y/y GBP/USD technical price analysis: Bears challenge uptrend at the 30-SMA support On the charts, the pound has fallen to the 30-SMA after failing to trade above the 1.2850 resistance level. Meanwhile, the RSI has broken below 50, showing a shift in sentiment to bearish. With stronger bearish momentum, the price will likely soon break below the 30-SMA to retest the 1.2750 support level. However, the price must break below 1.2750 to confirm a bearish reversal and make lower highs and lows. Still, the bullish trend will continue if the price fails to break below the 30-SMA or the 1.2750. The bulls might make a new high at the 1.2900 key psychological level if they regain momentum. https://www.forexcrunch.com/blog/2024/03/12/gbp-usd-price-analysis-boe-cut-odds-rise-after-weak-uk-data/
