2024-04-22 07:59

GBP/USD and EUR/GBP Analysis and Charts UK rate cut now seen in August. EUR/GBP at a new multi-month high. Most Read: British Pound Weekly Forecast - Lighter Data Week Could Mean Some Respite UK inflation will continue to fall towards target, and potentially quicker-than-originally predicted, according to the governor and deputy governor of the Bank of England. Earlier this week governor Bailey said that inflation was moving lower and ‘in the right direction’ for a cut and that the UK is ‘disinflating at what I call full employment…strong evidence now that the process is working its way through’. Late Friday, BoE deputy governor Dave Ramsden said that he has now ‘become more confident in the evidence that risks to persistence in domestic inflation are receding, helped by improved dynamics.’ Ramsden added that relative to the February official forecasts risks to inflation are pointed to the downside, ‘with a scenario where inflation stays close to the 2% target over the whole forecast period at least as likely.’ The BoE forecast for a three-year period. The latest UK rate cut probabilities have shifted forward with the first 25 basis point cut now expected at the August 1st central bank meeting. For all central bank meeting dates. See the DailyFX Central Bank Calendar With UK rate cuts now seen earlier, the British Pound is weakening across the board. Against a resilient US dollar, cable has now fallen below 1.2400 and seems set to test the 1.2313 (61.8% Fibonacci retracement) and then the 1.2303 level. Below here, big figure support at 1.2200 and 1.2100 before 1.2039 comes into focus. GBP/USD Daily Price Chart IG Retail data shows 71.54% of traders are net-long with the ratio of traders long to short at 2.51 to 1.The number of traders net-long is 0.56% lower than yesterday and 1.64% higher from last week, while the number of traders net-short is 2.07% higher than yesterday and 5.74% lower from last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall. See How Changes in IG Client Sentiment Can Help Your Trading Decisions Sterling’s weakness can be seen a little better against the Euro. The ECB is fully expected to cut rates by 25 basis points in June, and potentially again in July, leaving the ECB ahead of the BoE in the rate-cutting cycle. Despite this, the Euro strengthened sharply against the British Pound at the end of last week and is looking to build on those gains today. A clear break of 0.8620 would leave 0.8701 and 0.8715 as the next resistance levels. EUR/GBP Daily Price Chart What is your view on the British Pound – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/gbp-usd-eur-gbp-outlooks-sterling-weakens-after-bank-of-england-commentary-20240422.html

2024-04-21 17:00

Most Read: US Dollar Forecast: Markets Await US GDP & Core PCE - EUR/USD, USD/JPY, GBP/USD Following a brief surge in geopolitical tensions, traders may find relief in Iran's decision not to further retaliate against Israel's countermove, signaling a potential de-escalation in the Middle East and a return to focus on fundamental market drivers. Curious about what lies ahead for the U.S. dollar? Explore all the insights in our quarterly forecast! Economic Data in the Spotlight The upcoming week promises significant economic data releases that could sway market sentiment. Of particular interest are the US GDP for the first quarter and March's core PCE data, a key inflation indicator for the Fed. Recent strong figures in retail sales, CPI, and PPI suggest that these reports could potentially exceed expectations. Should the data prove hotter than anticipated, investors might conclude that the US economy remains resilient, and inflation is proving stubbornly persistent. This scenario could prompt a repricing of expectations, with traders betting on the Fed maintaining higher interest rates for longer and a shallower easing cycle than previously thought – a bullish outcome for U.S. yields and the U.S. dollar. Earnings Season Heats Up First-quarter earnings season marches on, with major tech companies slated to report their results. Tesla, Meta, Alphabet, Amazon, and Microsoft will offer insights into the corporate landscape. Strong earnings could lift market sentiment and bolster major indices, while disappointing results could raise concerns about economic challenges ahead. Want to know where the Japanese yen may be headed? Explore all the insights available in our quarterly outlook. Request your complimentary guide today! Central Bank Watch: Eyes on the BoJ Central banks continue to command attention, with the Bank of Japan's policy decision in the spotlight. Traders will closely analyze guidance for clues on the BoJ's stance on rate hikes. If the bank indicates a lack of urgency for further increases, pressure on the Japanese yen could intensify. However, given the yen's recent decline, the BoJ might adopt a slightly more hawkish stance to counteract currency weakness. Key Takeaways The coming week promises to be action-packed as traders navigate a mix of geopolitical developments, pivotal economic data releases, earnings reports, and central bank communications. Staying informed about these events will be crucial for traders looking to capitalize on market movements and manage their risk exposure. For a comprehensive look at the variables that may affect financial markets and stir up volatility in the upcoming trading sessions, explore the meticulously curated assortment of critical forecasts provided by the DailyFX team. FUNDAMENTAL AND TECHNICAL FORECASTS British Pound Weekly Forecast: Lighter Data Week Could Mean Some Respite The Pound is holding above 1.2400 but is under clear pressure and the bulls will have a fight on their hands to keep it above that psychologically important level this week. Euro Weekly Forecast: Geopolitics and Heavyweight US Data Will Run EUR/USD Next Week The European Central Bank has made it clear that interest rates are coming down, with the June meeting very much a live event, but the Middle East crisis and a slew of high US data will control EUR/USD next week. Gold Weekly Forecast: XAU/USD Bull Trend Refuses to Quit Gold trades higher, seemingly impervious to the dollar’s strength and elevated US yields. Buoyed by safe-haven appeal and central bank buying, XAU/USD uptrend persists. US Dollar Forecast: Markets Await US GDP & Core PCE - EUR/USD, USD/JPY, GBP/USD This article focuses on the fundamental and technical outlook for the U.S. dollar across three key pairs: EUR/USD, USD/JPY and GBP/USD. In the piece, we also explore market sentiment and price action dynamics ahead of major U.S. economic releases in the coming week. https://www.dailyfx.com/news/markets-week-ahead-gold-eur-usd-usd-jpy-boj-us-gdp-core-pce-big-tech-earnings-20240421.html

2024-04-21 06:00

Most Read: Decoding Fedspeak: How Central Banker Comments Move Markets – Gold & US Dollar The U.S. dollar, as measured by the DXD index, climbed to multi-month highs earlier this, fueled by mounting evidence that the Fed may wait a little longer before dialing back on policy restraint. Tight labor markets and persistent inflation have shattered hopes of rapid and deep rate cut later this year, pushing Treasury yields sharply higher, with the 2-year note coming within striking distance from recapturing the 5.0% psychological level. US DOLLAR INDEX WEEKLY PERFORMANCE Source: TradingView With last month’s red-hot retail sales, CPI, and PPI readings, there's a good chance these reports could top consensus estimates. That said, forecasts suggest Q1 GDP grew at an annualize rate of 2.1%, marking a slight deceleration from the robust 3.4% increase seen in the preceding quarter, yet still surpassing potential output, which by definition is inflationary. In terms of core PCE, this metric is seen increasing 0.3% on a seasonally adjusted basis, bringing the 12-month reading to 2.6% from 2.8% previously, a small but positive step in the right direction and a sign that underlying price pressures remain extremely sticky. UPCOMING US DATA In the event of an upside surprise in both data points, investors are likely to coalesce around the view that the economy is still running at full steam and that inflation will be harder to control. This scenario should prompt traders to push the Fed’s first rate cut further out and price in a shallower easing cycle. Higher interest rates for longer should keep yields biased upwards, reinforcing the U.S. dollar’s bullish impetus. All in all, the U.S. dollar’s prospects appear positive for now. The evolving macroeconomic picture clearly favors a scenario where the Federal Reserve will err on the side of caution, delaying its easing cycle to counter stubborn inflation, while counterparts like the ECB and BoE move closer to pivoting to a looser stance. This dynamic supports the dollar's potential for continued gains. EUR/USD FORECAST - TECHNICAL ANALYSIS After enduring notable losses last week, EUR/USD steadied and mounted a modest comeback over the past few days, rebounding off the psychological 1.0600 level and pushing past the 1.0650 mark. If the pair continues to recover in the coming days, resistance is expected at 1.0695 and 1.0725 thereafter. On further strength, all eyes will be on 1.0820. Conversely, should sellers reassert themselves and take charge of the market, technical support becomes apparent at 1.0600. Bulls must vigorously defend this technical floor; any failure to do so could exacerbate bearish momentum in the near term, paving the way for a deeper decline towards the 2023 lows near 1.0450. EUR/USD PRICE ACTION CHART EUR/USD Chart Created Using TradingView USD/JPY FORECAST – TECHNICAL ANALYSIS Earlier in the week, USD/JPY surged to multi-decade highs around 154.80 before retracing slightly from those lofty levels as the weekend approached. If the downward reversal gains traction in the upcoming trading sessions, support looms at 153.20 and 152.00 thereafter, with 150.80 possibly becoming a focal point if these price thresholds are breached. On the flip side, if USD/JPY resumes its climb, resistance is likely to materialize near 154.80, followed by 156.00, the upper boundary of a short-term rising channel in place since December of last year. While the pair maintains a bullish outlook, it's essential to proceed with caution given the overbought market conditions and the increasing probability of FX intervention by the Japanese government. USD/JPY PRICE ACTION CHART USD/JPY Chart Created Using TradingView GBP/USD FORECAST - TECHNICAL ANALYSIS GBP/USD sold off this week, slipping below a technical floor at 1.2430 and hitting its lowest point since November. With bearish momentum prevailing, there's potential for accelerated losses in the short term, possibly prompting a revisit of 1.2320 – a major Fibonacci support level. Prices may bottom out in this area before reversing higher; but in the case of a breakdown, a move towards 1.2168 could unfold. Alternatively, if sentiment shifts back in favor of buyers and cable rebounds off its current position, resistance zones can be identified at 1.2430 and 1.2525 subsequently. Upside clearance of these levels could boost upward impetus, creating the right conditions for a rally towards the 200-day simple moving average at 1.2570. GBP/USD PRICE ACTION CHART GBP/USD Chart Created Using TradingView https://www.dailyfx.com/news/forex-usd-dollar-forecast-markets-await-us-gdp-core-pce-eur-usd-usd-jpy-gbp-usd-20240421.html

2024-04-19 15:30

Most Read: British Pound Trade Setups & Technical Analysis - GBP/USD, EUR/GBP, GBP/JPY Trading environments often tempt us to follow the herd – buying into soaring prices and selling off in moments of widespread fear. However, savvy, and experienced traders understand the potential opportunities that lie within contrarian strategies. Tools like IG client sentiment offer a unique window into the market's overall mood, potentially identifying instances where excessive optimism or pessimism might signal a contrarian setup and impending reversal. Of course, contrarian signals aren't a guarantee of success. They gain their true power when integrated within a well-rounded trading strategy. By carefully blending contrarian observations with technical and fundamental analysis, traders develop a richer understanding of the forces shaping the market – dynamics that the masses might easily overlook. Let's explore this idea by examining IG client sentiment and its potential impact on the Japanese yen across three crucial pairs: USD/JPY, EUR/JPY, and GBP/JPY. USD/JPY FORECAST – MARKET SENTIMENT IG data reveals a heavily bearish stance towards USD/JPY, with 84.98% of clients holding net-short positions. This translates to a substantial short-to-long ratio of 5.66 to 1. Our trading approach often favors a contrarian viewpoint. This overwhelming bearish sentiment hints at a potential continuation of the USD/JPY's upward trajectory. The fact that traders are even more bearish than yesterday and last week strengthens this bullish contrarian outlook. Important Reminder: While contrarian signals offer a unique perspective on market sentiment, it's crucial to integrate them into a broader analytical framework. Combine contrarian insights with technical and fundamental analysis for a more informed approach to trading USD/JPY. Wondering where the euro might be headed over the coming months? Explore our second-quarter outlook for expert insights and analysis. Request your free guide today! EUR/JPY FORECAST – MARKET SENTIMENT IG data indicates a strong bearish bias towards EUR/JPY, with a substantial 83.24% of clients currently holding net-short positions. This results in a short-to-long ratio of 4.97 to 1. Our trading strategy often incorporates a contrarian perspective. This prevalent bearishness on EUR/JPY suggests the potential for further upward movement in the pair. The increasing number of net-short positions compared to yesterday and last week reinforces this bullish contrarian outlook. Crucial Note: While contrarian signals can offer valuable insights, they are most powerful when integrated into a comprehensive trading approach. Always consider technical and fundamental analysis alongside sentiment data for the most informed decisions about EUR/JPY. GBP/JPY FORECAST – MARKET SENTIMENT IG data reveals a significant bearish tilt among traders towards GBP/JPY. Currently, 79.34% hold net-short positions, resulting in a short-to-long ratio of 3.84 to 1. We often employ a contrarian approach to market sentiment. This widespread pessimism towards GBP/JPY suggests additional gains may be in store for the pair before any type of meaningful pullback. The continued increase in net-short positions strengthens this bullish contrarian outlook. Important Point: Remember that contrarian signals are just one tool in a trader's arsenal. A comprehensive trading strategy should also incorporate technical and fundamental analysis for a well-rounded approach to GBP/JPY. https://www.dailyfx.com/news/forex-japanese-yen-sentiment-analysis-outlook-usd-jpy-eur-jpy-gbp-jpy-20240419.html

2024-04-19 10:30

US Dollar Price and Analysis Iran has ‘no plan for immediate retaliation’ for the attack on Isfahan. VIX jumps to a fresh multi-month high. Gold Price Update: Israeli Attack Lifts Safe Haven Appeal, Weighs on Risk Assets Iran has ‘no plan for immediate retaliation against Israel’ after an attack on the province of Isfahan, a senior Iranian official has told the Reuters News Agency, downplaying fears, for now, of a further escalation in the war between the two countries. It remains to be seen if this latest attack was anything more than a symbolic action by Israel to appease the hardliners in the government, or if it is the start of further military retaliation after the Iranian drone attack earlier last Saturday. Safe haven assets jumped on the news. Gold popped back above $2,400/oz., while US Treasuries, the Japanese Yen, and the Swiss Franc grabbed a bid. Some of these early gains are now being erased as traders price in the recent comments from Iran. Why Major Currencies and Gold are Safe Havens in Times of Crisis The VIX ‘Fear Gauge’ also jumped at the open but is currently giving back some of its early gains. VIX S&P 500 Volatility Index You can learn how to trade a range of market conditions with our multi-pack of trading guides US Treasury yields fell sharply at the open with the 2-year touching 4.88% before turning higher. Recent Fed commentary suggests that rate cuts in the US are set to be pushed back even further with financial markets now forecasting the first rate cut at the September 18th FOMC meeting. The daily chart shows a potential bull flag being made, and if this plays out then the mid-October 5.25% print may come under pressure. UST 2-Year Yield Daily Chart The US dollar index remains within touching distance of posting a fresh multi-month high, boosted by its risk-off status. The daily chart also shows a potential bull flag being made and this, along with ongoing hawkish Fed speak, may leave the October 2nd high vulnerable. US Dollar Index Daily Chart All Charts via TradingView What are your views on the US Dollar – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/us-dollar-braced-for-further-swings-in-risk-as-middle-east-conflict-escalates-20240419.html

2024-04-19 08:10

Gold (XAU/USD) Analysis Gold spiked higher, falling narrowly short of the all-time high FX markets captured the flight to safety while US equity markets were shut Gold volatility index eyed ahead of the weekend Get your hands on the Gold Q2 outlook today for exclusive insights into key market catalysts that should be on every trader's radar: Gold Spiked Higher, Falling Narrowly Short of the All-Time High Gold prices spiked higher in the early hours of Friday morning after reports emerged of the Israeli strike on Iran. The back and forth between the two nations risks sparking a broader conflict between the two and prompted a short-lived flight to safety. Uncertainty surrounding the conflict in the Middle East has helped push gold prices higher and higher, nearly testing the all-time high around $2431. On the daily chart, gold continues to trade within overbought territory but the degree of overheating has been cooling down – suggesting a slow down in bullish momentum within the broader uptrend. The 1.618 Fibonacci extension of the 2020-2022 move reemerges as support at $2360, with a pocket of higher lows providing an area of further interest around the $2320 level. A strong US dollar and rising Treasury yields have done little to deter the rampant rise in the precious metal as central bank buying continues to add to the tailwind. Gold (XAU/USD) Daily Chart Source: TradingView, prepared by Richard Snow Gold market trading involves a thorough understanding of the fundamental factors that determine gold prices like demand and supply, as well as the effect of geopolitical tensions and war. Find out how to trade the safe haven metal by reading our comprehensive guide: While US stock markets were closed, the FX market was on hand to reveal the immediate response as soon as news broke of an Israeli attack on Iran. Traditional safe-haven currencies like the Swiss franc, Japanese yen and US dollar registered gains, while the more risk-aligned (high beta) Australian dollar witnessed the sharpest decline. AUD has plummeted in recent days due to its historical correlation with the S&P 500, which is on track for a third straight weekly decline. In addition, Chinese economic prospects remain underwhelming, adding further to the headwinds for AUD. Immediate Flight to Safety Exhibited in the FX market Overnight Source: Financial Juice, prepared by Richard Snow Gold Volatility Index in Focus The 20-day implied gold volatility (GVZ) index provides a forward-looking measure of gold market volatility, hence its usefulness to investors and traders. Recent volatility has dipped and the focus will be on whether the two nations consider the recent flareup finished or is Iran intends to respond once again. 30-Day Implied Gold Volatility (GVZ) Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/gold-price-update-israeli-attack-lifts-safe-haven-appeal-weighs-on-risk-assets-20240419.html