. Daily Forex Analysis - Euro and US Dollar Steady

Daily Forex Analysis – Euro and US Dollar Steady

Daily Forex Analysis – Euro and US Dollar Steady

31 May 2024

Introduction

The Euro and US Dollar are locked in a tight range ahead of key inflation data from both regions. This data will influence the European Central Bank (ECB) and Federal Reserve’s (Fed) interest rate decisions. The Pound Sterling and Japanese Yen are also under pressure due to these upcoming inflation reports.

Markets In Focus Today – EUR/USD

EUR/USD remains subdued above 1.0800 ahead of Eurozone, US inflation data.

EUR/USD holds the 1.0800 support with a focus on inflation readings on both sides of the Atlantic.Eurozone annual HICP is estimated to accelerate while US core PCE is projected to have grown steadily.Eurozone inflation data will impact the ECB’s policy outlook beyond June.EUR/USD consolidates in a tight range above the round-level support of 1.0800 in Friday’s European session. The price action in the major currency pair is surrounded by uncertainty ahead of the preliminary Eurozone Harmonized Index of Consumer Prices (HICP) data for May and the United States (US) core Personal Consumption Expenditure Price Index (PCE) data for April, which will be published at 09:00 GMT and 12:30 GMT, respectively. Eurozone annual headline HICP data is forecasted to have grown at a higher pace of 2.5% from 2.4% in April. In the same period, the core HICP data – which excludes volatile components such as food, energy, alcohol and tobacco – is estimated to have accelerated to 2.8% from the prior reading of 2.7%. However, the inflation data will provide cues about how the ECB will follow the rate-cut path beyond June.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0830 | Negative Crossover | Bearish
  • MA 20 : 1.0815 | Positive Crossover | Bullish
  • MA 50 : 1.0799 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.0837 | Negative Crossover | Bearish
  • MA 20 : 1.0821 | Positive Crossover | Bullish
  • MA 50 : 1.0772 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 52.7141 | Buy Zone | Bullish

Stochastic   Oscillator : 38.91 | Sell Zone | Positive

Resistance   And Support Levels :

  • R1 : 1.0826 R2 : 1.0893
  • S1 : 1.0609 S2 : 1.0542

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 1.0810 | Take Profit : 1.0881 | Stop Loss : 1.0770

GBP/USD

Pound Sterling ticks down as traders turn cautious ahead of US core PCE Inflation.

The Pound Sterling is down slightly against the US Dollar ahead of the US core PCE inflation data.US PCE inflation is expected to have steadied in April.UK business optimism improves due to cooling inflationary pressures and expectations for BoE rate cuts. The Pound Sterling (GBP) comes under pressure in Friday’s early London session as the sharp recovery move from a four-day low near 1.2680 appears to have lost momentum. The GBP/USD treads cautiously amid uncertainty ahead of the publication of the United States core Personal Consumption Expenditure Price Index (PCE) data for April, which will be released at 12:30 GMT. The core PCE inflation data, which is the Federal Reserve’s (Fed) preferred inflation measure, is estimated to have grown steadily by 0.3% and 2.8% on monthly and annual basis, respectively. Investors will keenly focus on this report as it could provide significant cues about the Fed’s rate-cut path.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2708 | Negative Crossover | Bearish
  • MA 20 : 1.2667 | Positive Crossover | Bullish
  • MA 50 : 1.2625 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.2723 | Negative Crossover | Bearish
  • MA 20 : 1.2652 | Positive Crossover | Bullish
  • MA 50 : 1.2583 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 57.7468 | Buy Zone | Bullish

Stochastic   Oscillator : 20.74 | Sell Zone | Neutral

Resistance   And Support Levels :

  • R1 : 1.2657 R2 : 1.2754
  • S1 : 1.2345 S2 : 1.2248

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 1.2693 | Take Profit : 1.2770 | Stop Loss : 1.2652

USD/JPY

Japanese Yen depreciates ahead of Fed’s preferred inflation gauge.

The Japanese Yen depreciates ahead of the Fed’s preferred inflation gauge, Core PCE.Tokyo CPI increased to 2.2% YoY in May, marking the 26th consecutive month of expansion.The hawkish remarks of the Fed officials are keeping the US Dollar stronger. The Japanese Yen (JPY) loses ground despite the Tokyo Consumer Price Index (CPI), which increased to 2.2% year-over-year in May, up from April’s 1.8% rise, a 26-month low. Additionally, Japan’s Retail Sales (YoY) grew 2.4% in April, accelerating from a downwardly revised 1.1% rise in March and surpassing market forecasts of 1.9% growth. This marks the 26th consecutive month of expansion, indicating a sustained period of healthy consumption in Japan. The Bank of Japan (BoJ) has maintained a deeply entrenched monetary policy stance. If nationwide inflation in Japan declines, it will prevent the central bank from raising interest rates. The significant rate differential between Japan and other countries continues to pressure the Japanese Yen, underpinning the USD/JPY pair.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 156.7705 | Positive Crossover | Bullish
  • MA 20 : 156.2164 | Positive Crossover | Bullish
  • MA 50 : 154.5367 | Positive Crossover | Bullish

Simple :

  • MA 10 : 156.8400 | Positive Crossover | Bullish
  • MA 20 : 156.0922 | Positive Crossover | Bullish
  • MA 50 : 154.5048 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 59.6182 | Buy Zone | Bullish

Stochastic   Oscillator : 16.63 | Sell Zone | Neutral

Resistance   And Support Levels :

  • R1 : 159.8369 R2 : 162.0561
  • S1 : 152.6531 S2 : 150.4339

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 156.60 | Take Profit : 158.00 | Stop Loss : 155.78

AUD/USD

Australian Dollar consolidates as traders exercise caution ahead of US Core PCE.

The Australian Dollar held ground despite softer China’s PMI data released on Friday.The AUD could appreciate due to the hawkish sentiment surrounding the RBA hiking rates.The US Dollar rebounded as Fed’s Logan expressed concerns about upside risks to inflation.The Australian Dollar (AUD) moves sideways after lower-than-expected NBS Purchasing Managers Index (PMI) data was released from China on Friday. Given the close trade relationship between Australia and China, any changes in the Chinese economy can significantly impact the Australian market. However, the AUD/USD pair had gained ground earlier in the day as the US Dollar (USD) struggled due to a slowdown in the US economy. The AUD also found support as the monthly inflation rate accelerated to 3.6%, raising the possibility that the Reserve Bank of Australia (RBA) might need to hike interest rates again. Investors anticipate that the RBA will maintain high rates for a longer period, with a rate cut not expected until May next year.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6633 | Negative Crossover | Bearish
  • MA 20 : 0.6620 | Positive Crossover | Bullish
  • MA 50 : 0.6587 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.6636 | Negative Crossover | Bearish
  • MA 20 : 0.6633 | Negative Crossover | Bearish
  • MA 50 : 0.6562 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 53.7091 | Buy Zone | Bullish

Stochastic   Oscillator : 48.81 | Neutral Zone | Positive

Resistance   And Support Levels :

  • R1 : 0.6602 R2 : 0.6668
  • S1 : 0.6386 S2 : 0.6320

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Stop Buy : 0.6646 | Take Profit : 0.6711 | Stop Loss : 0.6607

Elsewhere In The Forex Market

USD/CAD down 0.06% to 1.3673, The NZD/USD up 0.14% to 0.6122. The EUR/GBP up 0.01% at 0.8515. EUR/AUD down 0.01% at 1.6312. AUD/NZD down 0.11% at 1.0836, The USD/CNY up 0.18% at 7.2440, AUD/SEK up 0.1% at 7.0259, at the time of writing.

Key Economic Events & Data Release Today:

(GBP) BoE Gov Bailey Speaks at 00:20. (JPY) Retail Sales (YoY) (Apr) Forecast 1.8%, Previous 1.2% at 05:20. (CNY) Manufacturing PMI (May) Forecast 50.5, Previous 50.4 at 07:00. (NZD) Annual Budget Release at 07:30. (EUR) CPI (YoY) (May) Forecast 2.5%, Previous 2.4% at 14:30. (CAD) GDP (QoQ) (Q1) Previous 0.2% at 18:00. (USD) Core PCE Price Index (MoM) (Apr) Forecast 0.3%, Previous 0.3% at 18:00. (CAD) GDP (MoM) (Mar) Forecast 0.0%, Previous 0.2% at 18:00. (CAD) GDP (MoM) (Apr) at 18:01.