2024-03-19 14:52

British Pound Price and Analysis GBP/USD has slipped below the $1.27 mark The Dollar has gained broad support from suspicions that the Fed The Bank of England isn’t expected to alter policy, but its voting split will be fascinating Learn how to trade GBP/USD with our free guide The British Pound was sharply lower against the United States Dollar on Tuesday. The next forty-eight hours will bring interest rate decisions from both currencies’ central banks and the markets expect the net result will be some further strength in the greenback. The Federal Reserve will go first, on Wednesday. The Bank of England follows up a day later. Neither outfit is expected to alter its monetary settings but the big question for both as far as markets are concerned will be ‘when are rate cuts coming?’ The US economy has proven resilient despite higher rates, with inflation stickier than expected. Given that the Fed may leave markets with the impression that, while borrowing costs will probably still fall this year, they will do so later and to a lesser extent than investors thought back in January. Don’t forget that this very month was tipped as the starting gate for rate cuts as 2024 got going. Now June looks like the earliest possible date, and the markets are far from sure of even that. Learn how to trade market news and data here: This pushback of expectations has lent the Dollar broad support. Of course, investors also suspect that the next move by the Bank of England will be a rate cut, but they don’t think that’s coming soon either. Indeed, the last policy meet produced a rare, three-way split with votes for rate hikes, rate cuts and from the majority, a vote to hold. The ‘hold’ camp is tipped to win again this month. The BoE and the markets will get a look at official UK inflation numbers on Wednesday. They’re forecast to show a continued deceleration and, if they do, their effect on monetary-policy expectations should be minimal. Watch out for any unexpected strength though. That could give the Pound a bit of support. GBP/USD Technical Analysis GBP/USD Chart Compiled Using TradingView The Pound is clearly under a bit of pressure on the daily chart, as the technical picture matches the fundamental one. However, the broad trading range in place since late November remains very much in place. It’s perhaps more surprising that the recent uptrend from the lows of mid-February is also unbroken so far. Indeed, the market appears to have bounced at that point and it may be instructive to see if it can end this session above it. For now, it offers support very close to the market at 1.26698. Bulls will want to get the rate back above February 1’s intraday peak of 1.27540 if they’re going to have another try at the range top. GBP/USD’s Relative Strength Index suggests that the pair’s consistent falls since the first week of March may now leave it approaching oversold levels. This may argue for a pause in Sterling’s retreat, even if it proves temporary. ---By David Cottle for DailyFX https://www.dailyfx.com/news/british-pound-wilts-as-markers-await-both-fed-and-boe-20240319.html

2024-03-19 11:12

EUR/USD Prices, Charts, and Analysis Economic sentiment improves, but current conditions are still weak. Fed decision and narrative will shape EUR/USD direction in the coming days. The latest ZEW Financial Market Survey showed a sharp rise in Euro Area and German economic optimism, beating market forecasts by a margin. The German number - 31.7 - was the highest reading in over two years and beat market estimates of 20.5. The Euro Area number – 33.5 – was also the highest reading since February 2022. However, the German current conditions reading remained weak and within touching distance of lows last seen in 2020. While the improved sentiment data paints a marginally better economic picture for the EU, it won’t do a great deal in helping a currently struggling single currency. Over the next few months, both the US Federal Reserve and the European Central Bank will start cutting borrowing rates. Market expectations of US rate cuts have moved markedly over the last 3-4 months and this has propped up the US dollar. At the end of December, market probabilities suggested that the Fed would cut 175 basis points of its borrowing costs this year with the first move seen this month. The market now shows around 70 basis points of rate cuts with the first move fully priced in for the July FOMC meeting. In contrast probabilities for the ECB have grown with 86 basis points of cuts seen this year with the first 25 basis point move likely in June. Against this backdrop, EUR/USD will struggle to push higher. EUR/USD currently trades around 1.0845 and along with a range of other currency pairs and asset classes, is waiting for the latest FED decision tomorrow. The post-announcement commentary will need to be closely noted, as will the Fed’s new ‘dot plot’ to see member’s latest interest rate forecasts. EUR/USD has broken below recent trend support and is sitting on the 200-day sma after breaking below the 20- and 50-day smas. Next support is seen at 1.0787. The CCI indicator shows EUR/USD as neutral to slightly oversold. EUR/USD Daily Price Chart Charts using TradingView Retail trader data shows 54.47% of traders are net-long with the ratio of traders long to short at 1.20 to 1.The number of traders net-long is 0.56% higher than yesterday and 40.55% higher than last week, while the number of traders net-short is 1.24% higher than yesterday and 21.30% lower than last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall. See how retail trade data affects a wide range of tradeable assets. What is your view on the EURO – 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/euro-latest-zew-economic-sentiment-improves-eur-usd-hinges-on-fomc-decision-20240319.html

2024-03-19 09:06

Bank of Japan, USD/JPY News and Analysis BoJ’s hawkish actions accompanied by dovish rhetoric Yen depreciated further after the announcement – USD/JPY back above 150.00 Japanese (10-year) government bond yields ease as BoJ will continue purchases The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library BoJ’s Hawkish Actions Accompanied by Dovish Rhetoric The Bank of Japan (BoJ) voted to raise the benchmark interest rate into the 0% - 0.1% range in a historic move that marks the end of the Bank’s negative interest rate policy which was implemented to combat deflation that plagued the nation for years. The move sees the policy rate up into positive territory after 8 years and marks the first rate hike in 17 years. In the lead up to the meeting, the market assigned a 44% chance of a hike, with greater conviction of a hike materializing in April, which meant the hike came as a slight surprise. Moments before the announcement, Nikkei Asia ‘leaked’ the upcoming decision to hike and end to yield curve control (YCC), agency proving to be a reliable source for recent BoJ policy decisions. Learn how to prepare and setup for major news or data releases that have the potential to move markets: Japanese (10-year) government bond yields ease as BoJ Vows to continue purchases Alongside the rate hike, the BoJ has removed the official target for 10-year Japanese government bonds but stressed it will maintain purchases around the same level as before to maintain an orderly market (contain any potential blowout in borrowing costs for the Japanese government). The immediate effect of the announcement brought about a further decline in yields, which didn’t help the yen. 10-Year Japanese Government Bonds (Daily) Source: TradingView, prepared by Richard Snow Learn how to approach USD/JPY currency trading, understanding the fundamental considerations every trade should know: Yen depreciated further after the announcement – USD/JPY back above 150.00 USD/JPY continued the move higher as the yen came under pressure in the moments following the BoJ announcement. Typically, a surprise rate hike lifts the local currency but the lack of forward guidance around subsequent rate hikes meant that interest rate differentials are likely to work against the yen in a low volatility environment – favouring a continuation of the carry trade. The US dollar is also helping the rally as markets now anticipate a July rate cut instead of June. This has come as a result of hotter-than-expected inflation data (in some form or another) since December and rising energy prices (oil and natural gas). When asked about future hikes the Bank of Japan Governor Ueda mentioned that the April forecasts will shed more light on that and later on he spoke about the need to witness the right conditions in order to continue raising interest rates. USD/JPY 5-Min Chart Source: TradingView, prepared by Richard Snow The daily USD/JPY chart shows the large green candle rising above the 150 marker once again, to the dissatisfaction of the Japanese finance ministry which has previously voiced its dissatisfaction with yen depreciation around similar levels. In the absence of a more hawkish BoJ and while fundamentals continue to support the dollar, USD/JPY may continue to rise further with 151.90 the next level of consideration. A positive carry trade, low volatility and markets delaying the start of rate cuts in the US continues to support the bullish move in the pair. USD/JPY Daily Chart Source: TradingView, prepared by Richard Snow Stay up to date with the latest breaking news and themes driving markets by signing up to our weekly newsletter: https://www.dailyfx.com/news/bank-of-japan-exits-negative-interest-rate-policy-but-remains-supportive-20240319.html

2024-03-18 23:15

Most Read: Gold Price Outlook: Fed May Shake Up Markets. Pullback or Rally in Store? The Bank of Japan is set to wrap up its March monetary policy meeting on Tuesday (Japan time, still Monday in NY). After recent media leaks, the institution led by Governor Kazuo Ueda is widely expected to end negative borrowing costs, raising its benchmark rate to 0.0% from -0.1%. This would be the first hike since February 2007, in a turning point for the BOJ's long-standing ultra-dovish stance. The central bank is also seen terminating its yield curve control scheme, initiated in 2016 and under which it has been buying massive amounts of government bonds to target certain rates on the curve. In addition, the BoJ is also expected to end purchases of stock exchange-traded funds (ETFs) and other risk assets, which were initially introduced nearly 15 years ago. The move to start unwinding stimulus comes after salary negotiations between the country’s big unions and top businesses resulted in bumper pay boosts for Japanese workers in excess of 5.2%, the highest in more than 30%. Policymakers had repeatedly indicated that strong wage growth is necessary for a virtuous spiral that generates sustainable price increases driven by domestic demand. Curious about what lies ahead for the Japanese yen? Find comprehensive answers in our quarterly trading forecast. Claim your free copy now! With this decision now largely discounted, traders should focus on guidance to gauge market reaction. If the central bank signals that it will only withdraw accommodative policies at glacial speed and that future rate hikes will be measured, the yen is likely to weaken as disappointed bulls cut long exposure. But even if this scenario were to play out, the Japanese currency should have better days ahead. Conversely, if the BoJ unexpectedly adopts a hawkish stance in its outlook, traders should prepare for the possibility of a powerful bullish response in the yen. This could mean a sharp drop in pairs such as USD/JPY, GBP/JPY and EUR/JPY. However, the chances of this scenario materializing are slim, with key central bank officials leaning in favor of a very gradual normalization process. USD/JPY FORECAST - TECHNICAL ANALYSIS USD/JPY edged higher on Monday, consolidating above the 149.00 handle. If gains accelerate in the coming trading sessions, resistance appears at 149.70. On continued strength, market’s attention will be on 150.85, followed by 152.00. On the other hand, if sellers mount a comeback and trigger a pullback below 149.00/148.90, the focus is likely to transition towards the 50-day simple moving average. Below this indicator, all eyes will be on 147.50 and 146.50 thereafter, which corresponds to the 200-day simple moving average. USD/JPY PRICE ACTION CHART USD/JPY Chart Created Using TradingView https://www.dailyfx.com/news/boj-pivot-imminent-yen-ready-for-takeoff-or-tumble-setup-on-usd-jpy-20240318.html

2024-03-18 17:00

Most Read: Gold Price Forecast: Fed in Spotlight – Bullish Explosion or Crash Ahead? Gold prices advanced on Monday, but gains were limited in a context of market caution ahead of high-impact events in the coming sessions, including the FOMC announcement on Wednesday. In this context, XAU/USD climbed approximately 0.2% in early afternoon trading in New York, bouncing off technical support located around the $2,150 region. The Federal Reserve will hold its March meeting this week. Although the central bank is largely expected to keep its policy settings unchanged, the institution led by Jerome Powell could modify its forward guidance and adjust its outlook in the quarterly summary of economic projections in light of disappointing developments on the inflation front. The upside surprise in the last two CPI and PPI reports highlight a concerning trend: progress on disinflation is stalling and possibly even reversing. For this reason, the Fed may opt for a more cautious approach, postponing the transition to a looser stance and reducing the scope of future easing measures. This could mean two quarter-point rate cuts in 2024 instead of the three envisioned earlier. FOMC MEETING PROBABILITIES Source: CME Group If policymakers were to signal a less dovish roadmap and a delay in the easing cycle, U.S. Treasury yields and the U.S. dollar could shoot higher as Wall Street recalibrates interest rate expectations. This scenario could pose a threat to the current rally in precious metals and trigger a major downward correction in the space. This implies gold could be in a vulnerable position in the days ahead. On the flip side, if the central bank adheres to its previous outlook and indicates it is not far from gaining greater confidence to finally begin reducing borrowing costs, gold may find itself in a more advantageous position to initiate its next leg higher. Upside inflation risks evident in recent data, however, suggests the dovish FOMC outcome is less likely to play out. Wondering how retail positioning can shape gold prices? Our sentiment guide provides the answers you are looking for—don't miss out, get the guide now! GOLD PRICE TECHNICAL ANALYSIS Following a lackluster showing last week, gold prices found stability on Monday and successfully rebounded from support around the $2,150 mark. Should gains pick up traction in the coming days, trendline resistance at $2,175 could hinder further upside progress. However, if this barrier is breached, all eyes will be on the all-time high around $2,195. Conversely, if bears mount a comeback and regain control of the market, the first technical floor to watch in the event of a pullback appears at $2,150. Bulls must vigorously defend this zone to thwart an escalation of selling pressure; failure to do so may usher in a drop towards $2,085. Subsequent losses beyond this point could shift focus to $2,065. GOLD PRICE TECHNICAL CHART Gold Price Chart Created Using TradingView https://www.dailyfx.com/news/xau-usd-gold-price-outlook-fed-may-shake-up-markets-pullback-or-rally-in-store-20240318.html

2024-03-18 14:42

Pound Sterling Analysis Sterling in focus ahead of lower anticipated UK inflation – BoE up Next GBP/USD falls back into prior trading range as USD maintains bid EUR/GBP consolidates further – Approaching channel support GBP/JPY eyes a return to the recent high if the BoJ bides its time The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Sterling in Focus Ahead of Lower Anticipated UK Inflation – BoE up Next UK inflation, which is due tomorrow and just one day before the Bank of England (BoE) provides an update on monetary policy, is expected to drop notably. This is required for the BoE’s lofty forecast of 2% inflation by mid-year to materialize. Once more the focus will be concentrated on services inflation which remains elevated and is yet to reveal significant progress. Nevertheless, even if inflation surpasses estimates, the Monetary Policy Committee (MPC) is unlikely to alter their stance materially - supporting market expectations of a cut in August. UK rates at 5.25% hold the pound in good stead and a delayed start to rate cuts has added to its robustness. The committee’s vote split will be monitored closely in the event the hawks give in and decide to join those on the committee calling for a hold on interest rates. The Fed is also due to provide an update on its monetary policy along with the new summary of economic projections. The Fed’s dot plot will be key for markets in the event anything other than three rate cuts are priced in. The dots are set according to where Fed officials see interest rates at the end of 2024. Both Jerome Powell and Andrew Bailey are expected to largely maintain the same message Learn how to prepare ahead of major news and data releases with an easy to implement strategy: The image below provides the year-to-date performance of various currencies against the dollar: Source: Reuters, prepared by Richard Snow GBP/USD Falls Back into Prior Trading Range as USD Maintains Bid At the beginning of March, GBP/USD put in an impressive move – breaking above the trading channel that had encapsulated the majority of price action since the start of the year. However, the recent persistence in US inflation has sent the dollar higher against a number of G7 currencies. The RSI identified the GBP/USD peak and the pair is now testing the prior high of 1.2736 but as support this time. The potential for choppy price action remains, given the number of major central banks meeting this week and given the fact it is very unlikely for any movement apart from the Bank of Japan. The 50-day simple moving average (SMA) is the next dynamic level of support followed by the bottom of the trading range at 1.2585. Topside resistance appears at 1.2800 followed by the high 1.2893 GBP/USD Daily Chart Source: TradingView, prepared by Richard Snow EUR/GBP Consolidates Further – Approaches Channel Resistance EUR/GBP has built on the recent bullish pivot, now testing the 0.8560 level which has proved difficult to crack. Price action has moved above 0.8560 before but has struggled to close above it – evidenced by the appearance of multiple long upper wicks. Additionally, the 50 SMA (blue line) acts as dynamic resistance – potentially slowing the move to the upside. The euro remains devoid of a longer-term bullish move especially when factoring in Europe’s poor fundamentals (lower interest rate differential and stagnant economy). A close below 0.8560 may open the door for bears to send prices back towards channel support but a week full of major central bank announcements may result on choppy, non-directional moves. EUR/GBP Daily Chart Source: TradingView, prepared by Richard Snow Stay up to date with the latest breaking news and themes driving the market by signing up to our weekly newsletter: GBP/JPY Eyes a Return to the Recent High if the BoJ Bides its Time GBP/JPY has found dynamic support along the 50-day simple moving average (blue line), riding the wave higher. The Bank of Japan is due to announce its decision to hike or not to hike in the early hours of tomorrow morning after wage growth accelerated to a 30-year high at the end of last week. Markets have assigned a little less than 50% chance the Bank votes to hike tomorrow, with the base case for many observers favouring April instead. A hike would be the first in 17 years as the ultra-loose central bank looks to leave its negative interest rate policy behind. 191.30 is the high and appears as resistance while 188.80 and the 50 SMA come in as notable levels of support. Once again, given the sheer number of central banks meeting this week, a clear directional move may be difficult to come by. However, if the BoJ stands pat, the market appears motivated sell yen until such time as a rate hike is a more realistic outcome. GBP/JPY Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/sterling-outlook-gbp-usd-eur-gbp-gbp-jpy-setups-ahead-of-cpi-20240318.html