2024-03-12 13:16

US Dollar Analysis and Charts US inflation nudges higher in February. US rate cut expectations remain the same with June the probable start date. The latest US inflation report showed headline price pressures building in February while core inflation nudged lower. Both y/y readings came in 0.1% above market forecasts. According to the Bureau of Labor Statistics, ‘The index for shelter rose in February, as did the index for gasoline. Combined, these two indexes contributed over sixty percent of the monthly increase in the index for all items. The energy index rose 2.3 percent over the month, as all of its component indexes increased. The food index was unchanged in February, as was the food at home index. The food away from home index rose 0.1 percent over the month.’ US Inflation Report - BLS The US dollar picked up a small bid after the results with the US dollar index back above 103.00. Market probabilities for future US rate cuts however remained unchanged with the probability of a June rate cut still over 80%. US Dollar Index Daily Chart Gold is giving back some of its recent strong rally, but again the move is limited. The first level of support is seen on either side of the $2,050/oz. area before $2,120/oz. comes into focus. Gold Daily Price Chart Charts via TradingView What is your view on the US Dollar and Gold – 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-inflation-comes-in-hotter-than-expected-usd-gets-a-small-bid-gold-drifts-20240312.html

2024-03-12 08:17

GBP/USD and FTSE 100 Analysis and Charts UK unemployment rises to 3.9%. Data unlikely to move the dial on future interest rate cuts. FTSE 100now pressing against a zone of multi-month resistance. Most Read: Markets Week Ahead - Gold Soars, Rate Cuts Near, Nasdaq and Nvidia Wobble The latest Office for National Statistics jobs and wages data shows the UK labor market starting to cool with wages slipping and the unemployment rate nudging higher. Both moves were marginal and while today’s report will have buoyed the Bank of England, UK rate cut expectations are little moved and still point to the August MPC for the first Bank Rate cut. Later today -12:30 UK – the latest US inflation report will be released and this is set to be the main driver of price action in today’s session. GBP/USD hit a seven-month high of 1.2894 last Friday and has eased lower since. Cable currently trades around 1.2800, just above a zone of support between 1.2740 and 1.2780. A move higher brings last Friday’s high back into play before a gap to 1.3000. GBP/USD Daily Price Chart IG Retail data shows 38.25% of traders are net-long with the ratio of traders short to long at 1.61 to 1.The number of traders net-long is 18.49% higher than yesterday and 6.35% lower than last week, while the number of traders net-short is 5.54% lower than yesterday and 9.01% higher than last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise. See How IG Client Sentiment Can Help Your Trading Decisions The FTSE 100 is pushing higher again today and is nearing a cluster of prior highs around the 7,750 area. Above this zone, there is little in the way of strong resistance until the April 2023 high at 7937. Tomorrow’s UK GDP data – 07:00 UK – may make or break a move higher. FTSE 100 Daily 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/british-pound-latest-uk-labor-market-cools-gbp-steadies-ftse-100-probes-higher-20240312.html

2024-03-11 22:30

US CPI PREVIEW – GOLD, US DOLLAR, STOCKS The February’s U.S. inflation report will steal the spotlight on Tuesday morning Any deviation of the official data from market expectations could trigger volatility This article discusses possible scenarios for gold, the U.S. dollar and stocks Most Read: US Dollar Gains Before US Inflation, Volatility Ahead - Setups on EUR/USD, USD/JPY Tuesday marks an important day for investors of all stripes as the U.S. Bureau of Labor Statistics is set to release the February’s consumer price index survey, a key report that is anticipated to provide fresh insights into recent inflation dynamics and guide the Federal Reserve's near-term monetary policy outlook. In terms of projections, headline CPI is forecast to have risen 0.4% last month, bolstered by higher energy costs. This result would have kept the annual rate unchanged at 3.1%. Meanwhile, the core gauge is seen increasing 0.3% m-o-m, leading to a minor downshift in the year-over-year reading to 3.7% from the previous 3.9%. US INFLATION TREND Source: BEA MARKET EXPECTATIONS – US CPI POSSIBLE SCENARIOS FOR KEY ASSETS UPSIDE SURPRISE (HIGHER-THAN-EXPECTED CPI) A hotter-than-expected CPI report would confirm that January’s upside surprise was not a one-off event, but an indication that inflation may be reaccelerating and will be harder to defeat. Such an outcome might compel the Fed to revise its PCE forecast upward and potentially reduce the number of rate cuts envisioned for the year at its March meeting. This scenario should spark a hawkish repricing of interest rate expectations, pushing bond yields and the U.S. dollar higher. In response, gold prices and stocks could come under strong selling pressure. SUBDUED REPORT (LOWER-THAN-FORECAST CPI) Cooler-than-forecast CPI readings would bolster the idea that last month’s data was an anomaly and that progress on disinflation continues. This could give the Fed greater confidence that inflation is on a sustained path towards the 2.0% target, validating the market’s outlook for multiple rate cuts in 2024 and the start of the easing cycle in June. In these circumstances, we may witness further retracement in yields and the U.S. dollar in the days and weeks ahead. This could inject fresh bullish momentum into gold prices and risk assets. Eager to discover what the future holds for the U.S. dollar? Delve into our quarterly forecast for expert insights. Get your free copy now! https://www.dailyfx.com/news/forex-usd-inflation-preview-what-s-ahead-for-gold-prices-the-us-dollar-and-stocks-20240311.html

2024-03-11 17:10

US DOLLAR FORECAST – EUR/USD, USD/JPY U.S. dollar finds stability and rebounds modestly on Monday after a sharp sell-off last week The upcoming U.S. inflation report will play a pivotal role in shaping the market’s near-term trajectory. This article focuses on the technical outlook for EUR/USD and USD/JPY Most Read: US Dollar Forecast - US CPI to Spark Next Big Move - EUR/USD, USD/JPY, GBP/USD The US dollar found its footing on Monday, snapping a losing streak that dragged the DXY index to its weakest point since January Friday. Before today’s modest bounce, the greenback has been losing ground steadily amid falling U.S. yields on expectations that the FOMC would soon start easing. Last week, Fed Chairman Powell, in an appearance before Congress, indicated that it will likely be appropriate to begin dialing back policy restraint at some point this year, noting that policymakers need “just a bit more evidence” that inflation is moving sustainably towards 2.0% before pulling the trigger. Powell's comments, combined with mixed U.S. employment data showing a slight uptick in the jobless rate in February, bolstered bets that the central bank's first cut of the cycle will arrive in June, an event that reinforced the U.S. currency’s downturn. Will the U.S. dollar begin to rebound or continue to retreat? Request our quarterly forecast to find out! Although the outlook for the U.S. dollar has turned more negative in recent days, traders should not entirely rule out the potential for a comeback. That said, one potential catalyst that could trigger a bullish turnaround is the upcoming U.S. consumer price index report, due for release on Tuesday morning. UPCOMING US CPI DATA Projections indicate that February's headline CPI is poised to stay unchanged at 3.1% year-on-year. Simultaneously, the core index, excluding energy and food components, is anticipated to decelerate modestly to 3.7% from its prior reading of 3.9%. In terms of possible outcomes, stronger-than-forecast inflation figures, mirroring January’s upside surprise, should throw a wrench in the easing narrative, prompting Wall Street to reevaluate the likely timing of rate cuts by the FOMC. Such a situation would be positive for the U.S. dollar. Conversely, if CPI numbers come below consensus estimates by a wide margin, the market response should be the opposite. This scenario would strengthen the belief that a downshift in interest rates is imminent, driving bond yields lower and boosting the dollar in the process. EUR/USD FORECAST - TECHNICAL ANALYSIS EUR/USD edged lower on Monday, retracing towards the 1.0900 handle. If losses accelerate in the coming days, support looms at 1.0890. Below this area, all eyes will be on 1.0850, where multiple moving averages intersect with a significant upward trendline. On the other hand, if buyers return and re-establish dominance, prices are likely to climb back towards 1.0980. The market's response at this juncture will be crucial, as a breakout could pave the way for a rally towards 1.1020. Subsequent strength would then shift focus to 1.1075. EUR/USD PRICE ACTION CHART EUR/USD Chart Created Using TradingView Eager to discover what the future holds for USD/JPY? Delve into our quarterly trading forecast for expert insights. Get your free copy now! USD/JPY FORECAST - TECHNICAL ANALYSIS USD/JPY extended its decline on Monday, falling towards confluence support spanning from 146.50 to 146.00. This range marks the convergence of a key trendline, the 200-day simple moving average, and February's swing low. Additional losses from this point forward will put focus on the 145.00 level. Conversely, if buyers mount a comeback and trigger a rebound, resistance is anticipated around 147.50. Beyond this technical ceiling, the spotlight will be on 148.90. Advancing further, market attention might transition towards 149.70, then onto 150.90. USD/JPY PRICE ACTION CHART USD/JPY Chart Created Using TradingView https://www.dailyfx.com/news/forex-usd-dollar-gains-before-us-inflation-volatility-ahead-setups-on-eur-usd-usd-jpy-20240311.html

2024-03-11 15:00

GBP/USD and EUR/GBP Analysis and Charts Fed and ECB seen cutting rates in June, BoE in August. Rate differentials will support Sterling against the USD and Euro. Most Read: Markets Week Ahead - Gold Soars, Rate Cuts Near, Nasdaq and Nvidia Wobble Growing expectations that both the Federal Reserve (Fed) and the European Central Bank (ECB) will start cutting interest rates in June, while the Bank of England (BoE) waits until August, have driven Sterling higher against the US dollar and the Euro in the past couple of weeks. Current market predictions show a 73% chance of a US rate cut, and a near 100% chance of the ECB cutting by 25 basis points, while the BoE has a 50% chance of a June cut. The UK central bank is fully expected to cut rates by 25bps in August. With UK rates seen staying higher for longer, Sterling has reaped the benefit with GBP/USD hitting a multi-month high at the end of last week, while EUR/GBP is touching a notable range low. UK rate expectations may change if this week’s economic data shows the UK economy performing above current expectations. The unemployment rate remains close to the 3.5% multi-decade low, while UK growth continues to stumble. A pick-up in both growth and the unemployment rate will not change the BoE’s thinking at next week’s MPC decision but may prompt the UK central bank into changing its current rate cut narrative. GBP/USD hit 1.2894 last Friday - a seven-month high - before settling lower and currently trades around 1.2825. A prior block of highs in the 1.2740 to 1.27.80 area should slow any move lower, while there is little in the way of resistance before 1.3000 comes into play. The CCI indicator shows the pair as overbought in the short-term, although turning lower after last Friday’s high print. GBP/USD Daily Price Chart See How IG Client Sentiment Can Help Your Trading Decisions EUR/GBP is testing an area of support around the 0.8500 area that has been held over the past few months. A look at the weekly chart shows that if this support is broken, then 0.8340, the August 2022 swing low, comes into play. EUR/GBP Weekly 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/british-pound-update-gbp-usd-near-multi-month-highs-eur-gbp-eyes-new-lows-20240311.html

2024-03-11 13:00

Japanese Yen Analysis, Price, and Charts USD/JPY slides to two-month lows Broad Dollar weakness is especially clear in USD/JPY Could the end of ultra-loose Japanese monetary policy be in sight? The Japanese Yen continued a strong run of gains against the United States Dollar on Monday as the monetary stars in both Japan and the US appear to be aligning to strengthen it as they have not for decades. There’s a clear sense in the market that the Bank of Japan may at least be ready to rein in some of the extraordinary monetary stimulus it has had in place since the early 1990s as it has tried to stoke some domestic pricing pressures. At long last there are signs of those pressures and a chance that they might prove durable as wages rise. Japan has had negative short-term interest rates for years, along with a huge program of central bank asset buying. The Yen has lagged behind its peers in terms of yield and has usually been bid down as a result. Wires reported on Monday that the BoJ was absent from the exchange-traded-fund market as perhaps another hint that those extraordinary stimulus efforts are being reined. However, given the Nikkei’s current altitude, it may simply be that the BoJ has decided it no longer needs much help. The BoJ meets to set monetary policy again on March 19. It’s important to note that markets have scented a policy exit before and been disappointed. But this time really could be different. On the Dollar side of things, the prognosis that the Federal Reserve will be cutting rates in the second half of the year remains a base case in the markets, bolstered by the most recent commentary from Chair Jerome Powell. This has sent the greenback broadly lower but its struggle against the Yen is particularly acute. The week’s main near-term risk event is probably Tuesday’s US inflation data. Any upside surprise is liable to give Dollar bears pause, but anything short of that should see the hammering continue. USD/JPY Techncal Analysis USD/JPY Daily Chart Compiled Using TradingView February’s apparent range trade took USD/JPY below the medium-term uptrend which had previously been in place since January 2. February 29’s fall below that line has presaged further deep falls and now Dollar bears are attacking the second Fibonacci retracement of the rise up to mid-February’s peaks from the lows of early January. That comes in at 146.84 and it will be interesting to see whether that can hold on a daily closing basis at the end of Monday’s session. If it can’t, support at the 200-day moving average of 146.023 will be in the spotlight, ahead of a further retracement prop at 145.586. Bulls will need to recapture resistance at the former range base of 149.079 if they’re going to swing this market round their way. There seems little sign of their being able to do that, with any pauses in Dollar weakness likely to be merely consolidative for the bears. Learn how to trade USD/JPY with our free guide: --By David Cottle for DailyFX https://www.dailyfx.com/news/japanese-yen-gains-again-as-dollar-wilts-boj-policy-in-the-spotlight-20240311.html