. Daily Forex Analysis - Euro and Pound Rise, Yen Steady

Daily Forex Analysis – Euro and Pound Rise, Yen Steady

Daily Forex Analysis – Euro and Pound Rise, Yen Steady

27 May 2024

Introduction

The Euro and British Pound rose against the US Dollar on Monday as expectations for US interest rate cuts faded. Stronger Eurozone data and risk-on sentiment supported the Euro, while the Pound benefited from positive UK inflation data. The Japanese Yen also gained ground, while the Australian Dollar held steady ahead of key economic data.

Markets In Focus Today – EUR/USD

EUR/USD posts modest gains near 1.0850 on stronger PMI, weaker US Dollar.

EUR/USD trades with mild gains near 1.0850 in Monday’s early Asian session.The stronger US data and the Fed’s hawkish stance might lift the USD and cap the pair’s upside. ECB’s Cipollone said the time is right for June rate cuts as the recent data moved in the right direction. The EUR/USD pair trades in positive territory for the second consecutive day around 1.0850 in Monday’s early Asian session. The stronger-than-expected preliminary Eurozone Purchasing Managers Index (PMI) for May provides some support to the Euro (EUR). However, the chance that the European Central Bank (ECB) will cut interest rates in the upcoming months might cap the upside of the major pair. Investors await the preliminary US Gross Domestic Product (GDP) Annualized for the first quarter (Q1), which is due on Thursday. The GDP number is estimated to grow by 1.5% in Q1 from 1.6% prior. The stronger reading is likely to lift the Greenback in the near term.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0832 | Positive Crossover | Bullish
  • MA 20 : 1.0808 | Positive Crossover | Bullish
  • MA 50 : 1.0793 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.0848 | Positive Crossover | Bullish
  • MA 20 : 1.0798 | Positive Crossover | Bullish
  • MA 50 : 1.0775 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 59.0812 | Buy Zone | Bullish

Stochastic   Oscillator : 65.8869 | Buy 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 : 1.0821 | Take Profit : 1.0881 | Stop Loss : 1.0791

GBP/USD

GBP/USD rises to near 1.2750 despite diminishing expectations for Fed rate cuts.

GBP/USD extends gains due to risk-on sentiment after UoM’s 5-year Consumer Inflation Expectations.CME FedWatch Tool suggests the likelihood of the Fed’s rate cut in September has decreased to 44.9% from 49.0% a week earlier.UK’s softer inflation has tempered expectations of BoE’s rate cut in June.GBP/USD advances for the second successive session, trading around 1.2740, near two-month highs, during the Asian hours on Monday. The appreciation in the GBP/USD could be attributed to the risk-on sentiment, despite diminishing expectations for Federal Reserve interest rate cuts. It is worth noting that the UK market will be closed due to the Spring Bank Holiday and the US market will be closed due to the Memorial Day bank holiday on Monday. The University of Michigan’s 5-year Consumer Inflation Expectations for May on Friday. It eased slightly to 3.0%, below the forecasted 3.1%. Despite the upward revision of the Consumer Sentiment Index to 69.1 from a preliminary reading of 67.4, it still marked the lowest level in six months. These figures likely contributed to strengthening investors’ sentiment regarding potential rate cuts by the Federal Reserve. This has weakened the Greenback and underpinned the GBP/USD pair.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2686 | Positive Crossover | Bullish
  • MA 20 : 1.2637 | Positive Crossover | Bullish
  • MA 50 : 1.2606 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.2695 | Positive Crossover | Bullish
  • MA 20 : 1.2610 | Positive Crossover | Bullish
  • MA 50 : 1.2580 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 66.9285 | Buy Zone | Bullish

Stochastic   Oscillator : 88.4656 | Buy Zone | Positive

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 : 1.2697 | Take Profit : 1.2788 | Stop Loss : 1.2648

USD/JPY

Japanese Yen stays calm amid softer US Dollar, thin trading.

The Japanese Yen gained ground amid improved risk appetite on Monday.BoJ Governor Kazuo Ueda said there is a need to re-anchor inflation expectations at the 2% target.The US Dollar lost ground due to the lower 10-year US Treasury yield after softer UoM 5-year Inflation Expectation.The Japanese Yen (JPY) halted its three-day losing streak, possibly influenced by comments from Bank of Japan (BoJ) Governor Kazuo Ueda on Monday. Ueda remarked that progress has been made in moving away from zero and raising inflation expectations, but there is a need to re-anchor them, this time at the 2% target. He also said that the BoJ will proceed cautiously, aligning with other central banks that have inflation-targeting frameworks. Japan’s annual inflation rate remained above the Bank of Japan’s 2% target. This sustained inflationary trend exerts pressure on the central bank to contemplate policy tightening. The BoJ has underscored the importance of a virtuous cycle characterized by sustained and stable attainment of its 2% price target, coupled with robust wage growth, as essential for policy normalization.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 156.3409 | Positive Crossover | Bullish
  • MA 20 : 155.7704 | Positive Crossover | Bullish
  • MA 50 : 154.0880 | Positive Crossover | Bullish

Simple :

  • MA 10 : 156.2053 | Positive Crossover | Bullish
  • MA 20 : 155.5940 | Positive Crossover | Bullish
  • MA 50 : 154.0348 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 61.2058 | Buy Zone | Bullish

Stochastic   Oscillator : 48.55 | Buy Zone | Negative

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 : 156.55 | Take Profit : 157.95 | Stop Loss : 155.78

AUD/USD

Australian Dollar remains steady, gears up for Aussie Retail Sales.

The Australian Dollar gained ground due to risk-on sentiment after softer UoM 5-year Inflation Expectation on Friday.Australian equities rose above 7,770, following gains on Wall Street from Friday.The US Dollar weakened after the UoM 5-year Consumer Inflation Expectations (May) eased to 3.0% compared to the estimated 3.1%.The Australian Dollar (AUD) extends its gains against the US Dollar (USD) for the second consecutive session on Monday as overall market risk appetite improved, despite diminishing expectations for Federal Reserve interest rate cuts. Meanwhile, investors eagerly anticipate Australia’s Retail Sales on Tuesday, which is expected to grow 0.3% in April, swinging from the previous decline of 0.4%. The Australian Dollar may gain ground as the latest Reserve Bank of Australia (RBA) meeting minutes suggested that the board found it difficult to predict future changes in the cash rate, acknowledging that recent data increases the likelihood of inflation persisting above the 2-3% target for a prolonged duration.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6633 | Positive Crossover | Bullish
  • MA 20 : 0.6613 | Positive Crossover | Bullish
  • MA 50 : 0.6579 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.6650 | Negative Crossover | Bearish
  • MA 20 : 0.6615 | Positive Crossover | Bullish
  • MA 50 : 0.6555 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 55.4222 | Buy Zone | Bullish

Stochastic   Oscillator : 41.3410 | 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 : 0.6644 | Take Profit : 0.6711 | Stop Loss : 0.6607

Elsewhere In The Forex Market

USD/CHF up 0.07% to 0.9150, The NZD/USD up 0.12% to 0.6128. The EUR/GBP up 0.02% at 0.8515. EUR/AUD down 0.11% at 1.6347. AUD/NZD up 0.02% at 1.0830, The USD/CNY up 0.03% at 7.2443, AUD/SEK up 0.04% at 7.0733, at the time of writing.

Key Economic Events & Data Release Today:

(EUR) German Ifo Business Climate Index (May) Forecast –90.4, Previous –89.4 at 13:30. (CAD) Wholesale Sales (MoM) (Apr) Previous –1.1% at 18:00.