. Daily Forex Analysis - Euro and Pound Stable, NZD Gains

Daily Forex Analysis – Euro and Pound Stable, NZD Gains

Daily Forex Analysis – Euro and Pound Stable, NZD Gains

23 May 2024

Introduction

The Euro and Pound hold steady against the US Dollar ahead of key PMI data releases from the Eurozone, US, and UK. The Eurozone’s PMI is expected to rise slightly, while the ECB is eyed for a potential rate cut in June. Focus is also on the BoE’s monetary policy stance after UK inflation softened less than expected. The RBNZ’s hawkish hold boosts the NZD, while the USD weakens on wait-and-see approach from the Fed. The BoC may also delay a rate cut, supporting the Canadian Dollar.

Markets In Focus Today – EUR/USD

EUR/USD remains above 1.0800 ahead of Eurozone PMI.

EUR/USD holds its position ahead of the releases of PMI data from the Eurozone and Germany.Eurozone Manufacturing Services PMIs are expected to tick upwards slightly in May.FOMC Minutes suggested a hawkish sentiment surrounding the Fed policy stance.EUR/USD treads water to halt its three-day losing streak, hovering around 1.0820 during the Asian session on Thursday. The Euro’s appreciation against the US Dollar (USD) can be attributed to a corrective move for the latter. Investors are likely to await Purchasing Managers Index (PMI) data from both the Eurozone and Germany, with subsequent attention turning to the US PMI later in the North American session on Thursday.The Euro could face challenges ahead as the European Central Bank (ECB) is expected to consider reducing borrowing costs in its June meeting. This anticipation stems from the current inflation rate in the Euro Area, which stands at 2.4%, very close to the ECB’s target of 2.0%.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0827 | Negative Crossover | Bearish
  • MA 20 : 1.0801 | Positive Crossover | Bullish
  • MA 50 : 1.0789 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.0836 | Negative Crossover | Bearish
  • MA 20 : 1.0784 | Positive Crossover | Bullish
  • MA 50 : 1.0776 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 56.0082 | Buy Zone | Bullish

Stochastic   Oscillator : 7.06 | Neutral Zone | Neutral

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 : 1.0812 | Take Profit : 1.0896 | Stop Loss : 1.0765

GBP/USD

Pound Sterling exhibits firm-footing ahead as traders pare BoE rate cut bets.

The Pound Sterling holds gains near 1.2750 as a slower-than-expected decline in UK inflation weakens the BoE rate-cut case.Investors await the UK/US preliminary S&P Global PMI data for May.The US Dollar stays firm as the Fed emphasize wait and watch approach on interest rates.The Pound Sterling (GBP) clings to gains above the crucial support of 1.2700 in Thursday’s London session. The GBP/USD pair remains firm as traders pare bets that were leaned towards the Bank of England (BoE) shifting to policy-normalization in the June meeting after remaining hawkish for more than two years on interest rates. The expectations favoring the BoE that it will start reducing interest rates from the June meeting have diminished as the Consumer Price Index (CPI) report for April showed that inflation softened at a slower pace than expected.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2665 | Positive Crossover | Bullish
  • MA 20 : 1.2617 | Positive Crossover | Bullish
  • MA 50 : 1.2596 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.2657 | Positive Crossover | Bullish
  • MA 20 : 1.2590 | Positive Crossover | Bullish
  • MA 50 : 1.2580 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 67.0899 | Buy Zone | Bullish

Stochastic   Oscillator : 64.13 | 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 : 1.2704 | Take Profit : 1.2786 | Stop Loss : 1.2656

NZD/USD

NZD/USD gains traction above 0.6100 ahead of US PMI data.

NZD/USD trades in positive territory near 0.6108 in Thursday’s Asian session. The RBNZ’s hawkish hold has boosted the Kiwi. Fed minutes offered the cautious tine, indicating worries over the lack of progress on inflation.The NZD/USD pair gains momentum around 0.6108 during the Asian trading hours on Thursday. The New Zealand Dollar (NZD) edges higher as the Reserve Bank of New Zealand (RBNZ) kept interest rates steady and signaled the potential delay in interest rate cuts due to headwinds from sticky inflation. The RBNZ decided to keep the policy rate steady at 5.50% for the seventh meeting in a row at its May meeting on Wednesday. The central bank noted in the statement that “the welcome decline in inflation in part reflects lower inflation for goods and services imported into New Zealand. However, service inflation is receding slowly, and expected policy interest rate cuts continue to be delayed.” The RBNZ added that it expects inflation to ease within its target range by the end of 2024. The hawkish hold of the New Zealand central bank provides some support to the Kiwi and creates a tailwind for the NZD/USD pair.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6081 | Positive Crossover | Bullish
  • MA 20 : 0.6048 | Positive Crossover | Bullish
  • MA 50 : 0.6032 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.6084 | Positive Crossover | Bullish
  • MA 20 : 0.6029 | Positive Crossover | Bullish
  • MA 50 : 0.6001 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 62.0809 | Buy Zone | Bullish

Stochastic   Oscillator : 15.2 | Sell Zone | Neutral

Resistance   And Support Levels :

  • R1 : 0.6030 R2 : 0.6084
  • S1 : 0.5854 S2 : 0.5799

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 0.6078 | Take Profit : 0.6151 | Stop Loss : 0.6041

USD/CAD

Canadian Dollar gains ground above 1.3650 ahead of US PMI data.

USD/CAD trades on a weaker note near 1.3682 in Thursday’s early European session. The Fed minutes indicated worries over a lack of progress on inflation.The Bank of Canada (BoC) may dampen hopes of a June interest rate cut. The USD/CAD pair weakens to 1.3682 on Thursday during the early European session. The pair edges lower despite the weaker Greenback and the lower crude oil prices. Investors await the advanced reading of the US S&P Global PMI for May, which is due on Thursday. On Friday, the Canadian Retail Sales will be released. On the Loonie front, investors lowered their bets on the June interest rate cut and instead moved to July as the Bank of Canada (BoC) might need to see more sets of inflation, GDP, and jobs data before deciding to cut the interest rate. This, in turn, provides some support to the Canadian Dollar (CAD) and creates a headwind for USD/CAD. The money markets are pricing in a 53% chance of a 25 basis point (bps) cut in June, while the possibility of a July rate cut is fully priced in.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.3658 | Positive Crossover | Bullish
  • MA 20 : 1.3662 | Positive Crossover | Bullish
  • MA 50 : 1.3637 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.3645 | Positive Crossover | Bullish
  • MA 20 : 1.3671 | Positive Crossover | Bullish
  • MA 50 : 1.3644 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 53.6925 | Buy Zone | Bullish

Stochastic   Oscillator : 90.02 | Buy Zone | Neutral

Resistance   And Support Levels :

  • R1 : 1.3840 R2 : 1.3927
  • S1 : 1.3559 S2 : 1.3472

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Stop Buy : 1.3693 | Take Profit : 1.3760 | Stop Loss : 1.3656

Elsewhere In The Forex Market

USD/CHF down 0.12% to 0.9145, The USD/JPY down 0.04% to 156.72. The EUR/GBP down 0.03% at 0.8507. EUR/AUD up 0.06% at 1.6357. AUD/NZD down 0.19% at 1.0838, The USD/CNY up 0.05% at 7.2438, AUD/SEK down 0.14% at 7.0989, at the time of writing.

Key Economic Events & Data Release Today:

(EUR) German Manufacturing PMI Forecast 43.4, Previous 42.5 at 13:00. (GBP) Manufacturing PMI Forecast 49.5, Previous 49.1 at 14:00. (GBP) Service PMI Forecast 54.7, Previous 55.0 at 14:00. (USD) Initial Jobless Claims Forecast 220K, Previous 222K at 08:30. (USD) Building Permits Forecast 1.440M, Previous 1.467M at 08:30. (GBP) Manufacturing PMI (May) Forecast 50.0, Previous 51.3 at 09:45. (USD) New Home Sales (Apr) Forecast 677K, Previous 693K at 10:00.