2024-02-01 09:07
Powell challenged market expectations, shattering hopes for an early Fed rate cut in March. Investors were eagerly awaiting the BoE policy meeting later today. The pound remains one of the best performers against the dollar this year in the G10. The GBP/USD forecast revealed a bearish outlook as the pound lost its strength, succumbing to the relentless rally of the dollar. The FOMC policy meeting the day before saw Powell challenging market expectations, shattering hopes for an early Fed rate cut in March. Moreover, investors were eagerly awaiting the BoE policy meeting later today. The Fed maintained its interest rates yesterday. Moreover, Powell stated they would not start cutting rates until they were confident inflation was declining to the 2% target. Consequently, bets for a March rate cut fell to 38% from 59% before the policy meeting. Meanwhile, investors will look for hints on when interest rates in the UK will start falling at today’s BoE policy meeting. Notably, the pound remains one of the best performers against the dollar this year in the G10. Britain’s economy has recovered this year, and inflation remains relatively high. The PMI report from S&P Global released earlier in the year showed business activity at the highest level in seven months. Therefore, the BoE will likely keep interest rates unchanged. Additionally, investors expect the first rate cut to come in June. Notably, after the December UK inflation figures, markets reduced expectations on the number of BoE rate cuts this year from 125 to 100 basis points. There has been no guidance from BoE policymakers on the possible outcome of the policy meeting today. Therefore, analysts believe Thursday’s decision and messaging could cause a lot of volatility in the pair. GBP/USD key events today BoE monetary policy meeting BoE Gov Bailey speaks US unemployment claims ISM manufacturing PMI GBP/USD technical forecast: Price declines in a bearish channel The pound is declining in a bearish channel on the charts after failing to go beyond the 1.2760 key resistance level. Moreover, indicators on the chart support a bearish bias as the 30-SMA is above the price while the RSI is in bearish territory below 50. The price has fallen to retest the channel support. At this support, bulls might emerge to retest the channel resistance before the decline continues. However, if bearish momentum is strong, the price might break through the channel support to retest the 1.2600 key support level. https://www.forexcrunch.com/blog/2024/02/01/gbp-usd-forecast-powell-dims-march-rate-cut-prospects/
2024-01-31 10:49
Escaping from the Falling Wedge pattern signaled a EUR/USD price reversal. The FOMC and the US economic figures should bring high volatility. Only a new higher high activates a larger rebound. The EUR/USD price dropped as low as 1.0795 on Monday, where it found strong demand again. Its failure to stay below the 1.0800 psychological level shows sellers’ exhaustion. After such a fall, an up-retracement is highly probable. Still, the fundamentals remain the key drivers today. In the short term, the price dropped slightly as the US CB Consumer Confidence was reported at 114.8 points, above 114.2 expected and compared to 108.0 points in the previous reporting period. Meanwhile, JOLTS Job Openings came in at 9.03M, even though the traders expected a potential drop to 8.73 M. The Federal Reserve is expected to keep the Federal Funds Rate at 5.50%, but the FOMC Press Conference and FOMC Statement could change the sentiment. Furthermore, the US is to release the ADP Non-Farm Employment Change which could drop from 164K to 148K, and the Employment Cost Index, which could report a 1.0% growth after a 1.1% growth in the previous reporting period. Also, the German Prelim CPI could have an impact as well. As you can see on the hourly chart, the EUR/USD price jumped above the downtrend line signaling that the downward movement could be over. The false breakdown below the Falling Wedge’s support and through the weekly S1 of 1.0799 confirmed exhausted sellers. Now, it has tried again to retest the broken downtrend line before jumping higher. After the last rebound, the rate returned once again to retest the buyers. I think the EUR/USD pair could give birth to a new swing higher as long as it stays above the 1.08 psychological level. Still, only a new higher high validates a border rebound. https://www.forexcrunch.com/blog/2024/01/31/eur-usd-price-remains-with-shallow-upside-ahead-of-fomc/
2024-01-31 09:43
In the fourth quarter, inflation in Australia hit a two-year low, coming in at 0.6%. Market participants have placed an almost 50% chance of the first RBA rate cut in May. Traders are gearing up for the conclusion of the FOMC policy meeting. The AUD/USD forecast on Wednesday was bearish as inflation in Australia fell, increasing the likelihood of RBA rate cuts. However, the reaction to the report was little, with the currency recovering after an initial decline. In the fourth quarter, inflation in Australia hit a two-year low, coming in at 0.6% compared to expectations of 0.8%. This will play a significant role in the RBA’s policy meeting outcome next Tuesday. Market participants have placed an almost 50% chance of the first RBA rate cut in May. This is a significant increase from 30% before the inflation report. Meanwhile, in the US, traders are gearing up for the conclusion of the FOMC policy meeting. At the moment, traders expect the Fed to hold rates at the meeting and possibly give clues on the timing of rate cuts. Recent data from the US, including employment and GDP, have shown a resilient economy. The most recent report on job vacancies in the US came out on Tuesday. Job vacancies rose significantly, showing a robust labor market. Therefore, the Fed still has room to hold on to high interest rates. As a result, bets for a March rate cut have fallen significantly. Notably, interest rate futures show an almost 43% chance the Fed will cut rates starting in March. This is a big drop from the probability of 73% when the year began. AUD/USD key events today US private employment change Federal Funds Rate FOMC Statement FOMC Press Conference AUD/USD technical forecast: Price holds in a narrow range below 0.6625 On the charts, Aussie continues to trade in a tight range below the0.6625 key level. The price is below the 30-SMA within this tight range, meaning bears have the upper hand. Moreover, the RSI supports bearish momentum as it sits slightly below 50. If bears can keep the price below the 30-SMA, it might drop further to break out of consolidation. A strong break below the 0.6550 support would signal a continuation of the previous bearish trend. However, if bears fail to make a significant swing below 0.6550, it could be a second bottom for the downtrend. This would lead to a bullish reversal. https://www.forexcrunch.com/blog/2024/01/31/aud-usd-forecast-inflation-slide-signals-potential-rba-rate-cuts/
2024-01-31 08:24
The dollar is on track for its most significant monthly gain since September. Investors will closely watch for any hints from Fed Chair Jerome Powell regarding the possibility of a rate cut in March. Analysts predict that Canadian GDP will show a 0.1% increase in November. In today’s USD/CAD price analysis, the scales tilt slightly in favor of the bulls as the dollar edges higher in anticipation of the upcoming FOMC policy meeting. The greenback is gearing up for an impressive monthly surge, set to mark its most substantial gain since September. Meanwhile, Tuesday’s Canadian dollar reached a two-week high against its US counterpart. However, the gains were modest, occurring a day before domestic GDP data. According to Kyle Chapman, an FX markets analyst at Ballinger & Co in London, the Canadian currency has been influenced positively by rallying equities and improved sentiment throughout the week. However, it faced resistance at the 1.34 level. Notably, with the looming Fed decision and GDP data, traders have been cautious about pushing it higher. Markets expect the Fed to keep rates unchanged after its two-day policy meeting on Wednesday. Moreover, investors will closely watch for any hints from Fed Chair Jerome Powell regarding the possibility of a rate cut in March. Interest rate futures show a roughly 43% chance of a Fed rate cut in March. This is a decrease from 73% at the beginning of the year. Meanwhile, analysts predict that Canadian GDP will show a 0.1% increase in November. As the domestic economy slows, the Bank of Canada is now shifting its focus towards the timing of potential rate cuts. USD/CAD key events today US ADP Non-Farm Employment Change Canada GDP m/m Fed monetary policy meeting USD/CAD technical price analysis: Bears fight to reverse the trend On the technical side, the USD/CAD price has fallen to the 1.3400 support level as the bearish RSI divergence plays out. The bias is bearish, with the price under the 30-SMA and the RSI in bearish territory. Bears have taken over after the previous bullish trend paused at the 1.3525 resistance level. However, they are yet to find their footing below the 30-SMA. Moreover, to confirm a bearish trend, bears must start making lower lows and highs by breaking below the 1.3400 support level. However, if they fail to break below 1.3400, the price will likely climb to retest the 1.3525 resistance. https://www.forexcrunch.com/blog/2024/01/31/usd-cad-price-analysis-dollar-poised-for-significant-monthly-gain/
2024-01-30 11:28
XAU/USD is bullish as long as it stays above the lower median line. The US data should bring high action today. A new higher high activates further growth. The gold price extended its growth, reaching $2,040 today. Now, the precious metal has retreated a little and is trading at $2,035 at the time of writing. XAU/USD jumped higher as the US dollar dropped after reaching yesterday’s high of 103.82. Today, the US data should be decisive. The CB Consumer Confidence is expected to jump to 114.2 from 110.7 points, while JOLTS Job Openings may drop from 8.79M to 8.73M. Poor economic figures should weaken the greenback. On the contrary, positive data could punish the price of gold. Tomorrow, the Australian CPI q/q may report a 0.8% growth after a 1.2% growth in the previous reporting period, while CPI y/y is expected to register a 3.7% growth. Lower inflation could boost the XAU/USD. Furthermore, the US ADP-Non Farm Employment Change could drop from 164K to 145K, the Employment Cost Index could report a 1.0% growth, while Chicago PMI may jump to 47.9 points. Still, the most important event of the week is represented by the FOMC. The Federal Funds Rate should remain at 5.50% but the FOMC Press Conference and FOMC Statement should bring sharp movements. As you can see on the hourly chart, the price jumped above the downtrend line after retesting the lower median line (lml) of the ascending pitchfork, signaling an upside continuation. The bias is bullish in the short term as long as it stays above the lower median line (lml). In the short term, the rate could retest the broken downtrend line before extending its growth. A new higher high validates more gains ahead. Only failing to stay above the downtrend line may invalidate the upside scenario. https://www.forexcrunch.com/blog/2024/01/30/gold-price-breakout-needs-confirmation-fomc-eyed/
2024-01-30 10:29
Traders reduced the likelihood of the Fed lowering rates in March from 89% a month ago to 48%. Discussions among ECB policymakers on Monday revealed disagreements on the timing of rate cuts. Traders are fully pricing in an ECB rate cut in April. Tuesday’s EUR/USD price analysis revealed a bearish sentiment as investors braced for the possibility that the Fed might push back on expectations of an early rate cut. The Fed will end its policy meeting on Wednesday. Notably, the likelihood of the Fed lowering rates in March fell from 89% a month ago to 48% as the US economy remained robust. In contrast, there is a less favorable economic outlook for European countries, making the euro less attractive. Helen Given, an FX trader at Monex USA in Washington, remarked, “The macro picture in the US looks a lot better than the macro picture in European Union countries and the eurozone in general.” Tomorrow, investors will closely monitor comments from Fed Chairman Jerome Powell. Powell had indicated in December that the Fed is shifting towards a cycle of rate cuts. Meanwhile, the ECB kept interest rates at a record-high 4% on Thursday, emphasizing its commitment to fight inflation. Discussions among ECB policymakers on Monday revealed disagreements on the timing for potential rate cuts. ECB policymaker Peter Kazimir expressed in a blog post, “The next move will be a cut, and it is within our reach.” He emphasized that the precise timing, whether in April or June, is less important. Meanwhile, Mario Centeno, Portugal’s central bank governor, preferred earlier action, stating that it would enable the ECB to implement changes more gradually. Traders are now fully pricing in a move in April. EUR/USD key events today The US CB Consumer Confidence report The US JOLTS Job Openings report EUR/USD technical price analysis: Price reaches crucial 1.0800 support On the charts, the pair has finally touched the 1.0800 support level. However, the decline from the 1.0900 key resistance level was slow and shallow, indicating that bears had weakened. Moreover, weakness can be seen in the RSI, which has made higher lows while the price declines. Therefore, there is a bullish divergence that might lead to a reversal in the trend. For bulls to take over, the price must break above the 30-SMA and the 1.0900 to start making higher highs and lows. However, if the bearish bias persists, the price might break below the 1.0800 support. https://www.forexcrunch.com/blog/2024/01/30/eur-usd-price-analysis-feds-resistance-to-cut-bets-looms/
