. Daily Forex Analysis - Euro Weakens, GBP Under Pressure

Daily Forex Analysis – Euro Weakens, GBP Under Pressure

Daily Forex Analysis – Euro Weakens, GBP Under Pressure

30 May 2024

Introduction

The Euro weakens against the US Dollar (USD) as expectations of a Fed rate cut in September diminish. The USD strengthens on hawkish Fed comments and a positive US economic outlook. Meanwhile, the GBP and AUD face pressure due to a stronger USD, while CHF gains ground on upbeat Swiss GDP data.

Markets In Focus Today – EUR/USD

EUR/USD dips below 1.0800 as Fed rate-cut prospects for September wane.

EUR/USD falls below 1.0800 amid dismal market mood.The ECB is widely anticipated to deliver a rate-cut move in June’s policy meeting.The US core PCE price index is estimated to have grown steadily in April.EUR/USD extends its downside below the crucial support of 1.0800 in Thursday’s European session. The major currency pair faces severe pressure as the US Dollar (USD) strengthens amid cautious market sentiment. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, jumps to a two-week high slightly above 105.00. Investors rush to the US Dollar as they expect that the Federal Reserve (Fed) will not be leaning towards interest rate cuts anytime soon. Fed policymakers have made it clear that they want to see inflation slow for months to gain confidence that price pressures will sustainably return to the desired rate of 2%.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0825 | Negative Crossover | Bearish
  • MA 20 : 1.0811 | Negative Crossover | Bearish
  • MA 50 : 1.0796 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.0838 | Negative Crossover | Bearish
  • MA 20 : 1.0816 | Negative Crossover | Bearish
  • MA 50 : 1.0771 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 48.9538 | Neutral Zone | Neutral

Stochastic   Oscillator : 44.6359 | Neutral Zone | Neutral

Resistance   And Support Levels :

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

Overall Sentiment : Neutral Market Direction : Buy

Trade Suggestion : Limit Buy : 1.0797 | Take Profit : 1.0864 | Stop Loss : 1.0759

GBP/USD

GBP/USD holds losses below 1.2700 on firmer US Dollar.

GBP/USD trades softer around 1.2695 on the firmer USD on Thursday. Investors await the US Q1 GDP on Thursday, which is expected to expand by 1.3%. A softer UK inflation outlook triggered the rate cut expectation from the BoE. The GBP/USD pair weakens to 1.2695 during the early Asian session on Thursday. The downtick of the pair is supported by the stronger US Dollar (USD) amid the higher US yields and lower bets of the Federal Reserve (Fed) rate cut in September. nvestors will take more cues from the second estimate of the US Gross Domestic Product (GDP) for Q1 2024 on Thursday, which is expected to grow 1.3%. If the report shows a stronger-than-expected reading, this might further boost the USD and create a headwind for GBP/USD. On the GBP’s front, the growing speculation that the Bank of England (BoE) will start cutting interest rates in its August meeting due to a softer UK inflation outlook weighs on the Cable. Concerns about political uncertainty might undermine the GBP and cap the upside for the pair in the near term.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2703 | Negative Crossover | Bearish
  • MA 20 : 1.2661 | Positive Crossover | Bullish
  • MA 50 : 1.2620 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.2720 | Negative Crossover | Bearish
  • MA 20 : 1.2642 | Positive Crossover | Bullish
  • MA 50 : 1.2580 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 58.0551 | Buy Zone | Bullish

Stochastic   Oscillator : 73.9946 | Buy 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 : 1.2687 | Take Profit : 1.2770 | Stop Loss : 1.2641

AUD/USD

Australian Dollar edges lower as investors adopt caution ahead of US GDP.

The Australian Dollar loses ground due to investors’ caution ahead of US GDP due on Thursday.Australia’s 10-year Government Bond Yield reaches a four-week high of 4.52%.The US Dollar remains steady as Treasury yields appreciate due to risk aversion.The Australian Dollar (AUD) extended its losses, possibly driven by investors adopting a cautious stance ahead of the release of US Gross Domestic Product Annualized (Q1) data on Thursday and the Core Personal Consumption Expenditures (PCE) Price Index figures on Friday. These data events are anticipated to offer insights into the Federal Reserve’s potential stance on interest rate adjustments. The Australian Dollar may limit its losses due to the increase in the Australian 10-year Government Bond Yield to a four-week high of 4.52%. This shift reflects investor sentiment that the Reserve Bank of Australia (RBA) will maintain higher interest rates for longer. 

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6629 | Negative Crossover | Bearish
  • MA 20 : 0.6616 | Negative Crossover | Bearish
  • MA 50 : 0.6584 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.6639 | Negative Crossover | Bearish
  • MA 20 : 0.6631 | Negative Crossover | Bearish
  • MA 50 : 0.6559 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 50.4134 | Buy Zone | Bullish

Stochastic   Oscillator : 33.5755 | Sell Zone | Negative

Resistance   And Support Levels :

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

Overall Sentiment : Neutral Market Direction : Sell

Trade Suggestion : Stop Sell : 0.6595 | Take Profit : 0.6529 | Stop Loss : 0.6649

USD/CHF

USD/CHF drops towards 0.9100, Swiss GDP arrives stronger than expected.

USD/CHF weakens to 0.9102 in Thursday’s early European session. The Swiss economy grew 0.5% QoQ in Q1, stronger than the estimation and the previous reading of 0.3% expansion.The Fed’s Bostic said the central bank has a ways to go to curb the inflation seen over the last few years. The USD/CHF pair attracts some sellers around 0.9102 on Thursday during the early European trading hours. The Swiss Franc (CHF) gains traction after the release of a stronger-than-expected Switzerland’s Gross Domestic Product (GDP) report for the first quarter (Q1) of 2024. USD/CHF currently trades 0.32% lower on the day. The Swiss economy continued to expand in Q1, the State Secretariat for Economic Affairs (SECO) revealed on Thursday. Switzerland’s GDP numbers grew 0.5% QoQ in Q1. The figure came in better than the estimation and the previous reading of 0.3% expansion. On an annual basis, the GDP figure arrived at 0.6% YoY in Q1, above the market consensus of 0.5%. The upbeat GDP reading provides some support to the CHF and drags the USD/CHF lower to weekly lows.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.9115 | Negative Crossover | Bearish
  • MA 20 : 0.9105 | Negative Crossover | Bearish
  • MA 50 : 0.9053 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.9121 | Negative Crossover | Bearish
  • MA 20 : 0.9091 | Negative Crossover | Bearish
  • MA 50 : 0.9085 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 51.2856 | Buy Zone | Bullish

Stochastic   Oscillator : 32.97 | Sell Zone | Negative

Resistance   And Support Levels :

  • R1 : 0.9201 R2 : 0.9248
  • S1 : 0.9051 S2 : 0.9004

Overall Sentiment : Neutral Market Direction : Sell

Trade Suggestion : Stop Sell : 0.9097 | Take Profit : 0.9017 | Stop Loss : 0.9154

Elsewhere In The Forex Market

USD/CAD up 0.01% to 1.3719, The USD/JPY down 0.41% to 157.04. The EUR/GBP up 0.01% at 0.8503. EUR/AUD up 0.06% at 1.6349. AUD/NZD up 0.18% at 1.0830, The USD/CNY down 0.04% at 7.2455, AUD/SEK down 0.22% at 7.0403, at the time of writing.

Key Economic Events & Data Release Today:

(NZD) Annual Budget Release at 07:30. (CHF) GDP (QoQ) (Q1) Forecast 0.3%, Previous 0.3% at 12:30. (EUR) Unemployment Rate (Apr) Forecast 6.5%, Previous 6.5% at 14:30. (USD) GDP (QoQ) (Q1) Forecast 1.6%, Previous 3.4% at 18:00. (USD) Initial Jobless Claims Forecast 218K, Previous 215K at 18:00. (USD) Pending Home Sales (MoM) (Apr) Forecast –1.1%, Previous 3.4% at 19:30.