. Daily Forex Analysis - Euro Soars, CAD Gain Ground

Daily Forex Analysis – Euro Soars, CAD Gain Ground

Daily Forex Analysis – Euro Soars, CAD Gain Ground

04 Jun 2024

Introduction

The Euro (EUR) is rising against the US Dollar (USD) as the USD weakens due to expectations of interest rate cuts by the Federal Reserve (Fed). Investors are awaiting key economic data from the US and policy decisions from the European Central Bank (ECB) and Bank of Canada (BoC). The British Pound (GBP), New Zealand Dollar (NZD), and Canadian Dollar (CAD) are also all gaining against the USD.

Markets In Focus Today – EUR/USD

EUR/USD clings to gains as US Dollar weakens, ECB policy in focus.

EUR/USD jumps above 1.0900 as the US Dollar weakens due to firm Fed rate-cut prospects.Traders raise Fed rate-cut bets amid fears of slower US economic growth.The ECB is due to announce June’s monetary policy decision on Thursday.EUR/USD holds strength slightly above the round-level resistance of 1.0900 in Tuesday’s European session. Sheer strength in the major currency pair is driven by a sharp sell-off in the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, slips to an almost two-month low near the crucial support of 104.00 as a weak United States (US) ISM Manufacturing PMI report for May deepens fears of slowing economic growth and eases risks of persistent inflation. Meanwhile, investors await the US ISM Services PMI, ADP Employment Change and the Nonfarm Payrolls (NFP) report for May and JOLTS Job Openings data for April. This slew of economic data will influence market speculation for Fed rate cuts in September.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0856 | Positive Crossover | Bullish
  • MA 20 : 1.0832 | Positive Crossover | Bullish
  • MA 50 : 1.0807 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.0848 | Positive Crossover | Bullish
  • MA 20 : 1.0836 | Positive Crossover | Bullish
  • MA 50 : 1.0775 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 62.5522 | Buy Zone | Bullish

Stochastic   Oscillator : 81.4972 | Buy Zone | Positive

Resistance   And Support Levels :

  • R1 : 1.0890 R2 : 1.0948
  • S1 : 1.0703 S2 : 1.0645

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 1.0875 | Take Profit : 1.0941 | Stop Loss : 1.0838

GBP/USD

GBP/USD Price Bulls have the upper hand above 1.2800, highest since March.

GBP/USD struggles to capitalize on the move to a nearly three-month high set this Tuesday.Fed rate cut bets keep the USD bulls on the defensive and lend some support to the major.The technical setup validates the positive outlook and supports prospects for further gains.The GBP/USD pair climbs to its highest level since March 14 during the Asian session on Tuesday, albeit struggles to capitalize on the move and is currently placed just above the 1.2800 mark. The near-term bias, meanwhile, seems tilted in favor of bullish traders in the wake of the prevalent selling bias surrounding the US Dollar (USD). In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, drops to a nearly two-month low on the back of rising bets for an imminent rate cut by the Federal Reserve (Fed), bolstered by Monday’s disappointing US ISM PMI. Apart from this, expectations that the Bank of England (BoE) might keep interest rates at their current level for a little bit longer should underpin the British Pound (GBP) and validate the near-term positive outlook for the GBP/USD pair.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2744 | Positive Crossover | Bullish
  • MA 20 : 1.2695 | Positive Crossover | Bullish
  • MA 50 : 1.2640 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.2746 | Positive Crossover | Bullish
  • MA 20 : 1.2680 | Positive Crossover | Bullish
  • MA 50 : 1.2590 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 67.3572 | Buy Zone | Bullish

Stochastic   Oscillator : 89.4694 | Buy Zone | Positive

Resistance   And Support Levels :

  • R1 : 1.2798 R2 : 1.2882
  • S1 : 1.2527 S2 : 1.2443

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 1.2749 | Take Profit : 1.2820 | Stop Loss : 1.2706

NZD/USD

NZD/USD consolidates its gains near 0.6200 amid weaker US PMI data.

The NZD/USD pair consolidates its gains near 0.6190 on Tuesday during the early Asian session. The worse-than-expected US ISM Manufacturing PMI data has dragged the Greenback lower and supported the pair. Investors await the US ISM Services PMI, which is due on Wednesday. On Friday, US employment data, including Nonfarm Payrolls, Unemployment Rate, and Average Hourly Earnings will be in the spotlight. On the Kiwi front, the encouraging Chinese Caixin Manufacturing PMI for May lifted the China-proxy New Zealand Dollar (NZD) as New Zealand is one of China’s leading trading partners. Apart from this, the hawkish stance from the Reserve Bank of New Zealand (RBNZ) further boosted the NZD, as RBNZ Deputy Governor Christian Hawkesby said in recent weeks that cutting interest rates is not part of the near-term discussion and the central bank needs to maintain rates for longer to ensure inflation returns to the 1-3% target range.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6138 | Positive Crossover | Bullish
  • MA 20 : 0.6103 | Positive Crossover | Bullish
  • MA 50 : 0.6063 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.6134 | Positive Crossover | Bullish
  • MA 20 : 0.6101 | Positive Crossover | Bullish
  • MA 50 : 0.6017 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 67.4518 | Buy Zone | Bullish

Stochastic   Oscillator : 89.0360 | Buy Zone | Positive

Resistance   And Support Levels :

  • R1 : 0.6175 R2 : 0.6245
  • S1 : 0.5949 S2 : 0.5880

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 0.6164 | Take Profit : 0.6216 | Stop Loss : 0.6137

USD/CAD

USD/CAD remains on the defensive above 1.3600 ahead of the BoC rate cut decision.

USD/CAD trades with mild losses near 1.3620 on Tuesday. The US business activity in the manufacturing sector contracted for the second consecutive month in May.Markets expect the BoC to cut its key lending rate by a quarter of a percentage point on Wednesday. The USD/CAD pair remains on the defensive around 1.3620 during the early Asian session on Tuesday. The downtick of the pair is backed by the softer US Dollar (USD) to the 104.00 support level on Monday. Investors will shift their focus to the US Services PMI on Wednesday ahead of the highly-anticipated Nonfarm Payrolls (NFP). The Bank of Canada (BoC) is expected to cut its overnight rate by 25 basis points (bps) to 4.75% on Wednesday as inflation in Canada cooled down in April. CIBC Capital Markets economists anticipate the BoC could cut its interest rate up to three times before the Fed begins easing policy. The divergence of policy rate between the BoC and Fed might drag the Canadian Dollar (CAD) lower and create a tailwind for USD/CAD. The BoC governor Tiff Macklem said that a rate cut is possible, but that the decision would be driven by economic data.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.3654 | Negative Crossover | Bearish
  • MA 20 : 1.3659 | Negative Crossover | Bearish
  • MA 50 : 1.3643 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.3665 | Negative Crossover | Bearish
  • MA 20 : 1.3656 | Negative Crossover | Bearish
  • MA 50 : 1.3661 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 48.8567 | Neutral Zone | Neutral

Stochastic   Oscillator : 28.5963 | Sell Zone | Positive

Resistance   And Support Levels :

  • R1 : 1.3740 R2 : 1.3786
  • S1 : 1.3593 S2 : 1.3547

Overall Sentiment : Neutral Market Direction : Sell

Trade Suggestion : Limit Sell : 1.3679 | Take Profit : 1.3606 | Stop Loss : 1.3730

Elsewhere In The Forex Market

AUD/USD down 0.37% to 0.6664, The USD/JPY down 0.13% to 155.90. The EUR/GBP down 0.02% at 0.8513. EUR/AUD up 0.26% at 1.6343. AUD/NZD down 0.20% at 1.0780, The USD/CNY up 0.04% at 7.2453, AUD/SEK down 0.28% at 6.9421, at the time of writing.

Key Economic Events & Data Release Today:

(AUD) Retail Sales (MoM) Forecast 0.1%, Previous –0.4% at 07:00. (EUR) German Unemployment Change (May) Forecast 7K, Previous 10K at 13:25. (USD) JOLTs Job Openings (Apr) Forecast 8.370M, Previous 8.488M at 19:30.