. Daily Forex Analysis -Fed Rate-Cut Bets Influence EUR/USD and USD/CAD

Daily Forex Analysis -Fed Rate-Cut Bets Influence EUR/USD and USD/CAD

Daily Forex Analysis -Fed Rate-Cut Bets Influence EUR/USD and USD/CAD

16 May 2024

Introduction

Pound Sterling holds firm near 1.2700 amid strong UK wage growth and firm Fed rate-cut bets. GBP/USD remains upbeat, while EUR/USD and USD/CAD reflect similar trends, influenced by Fed rate expectations and economic data. USD/JPY stabilizes following a sharp US Dollar sell-off.

Markets In Focus Today – GBP/USD

Pound Sterling clings to gains near 1.2700 on firm Fed rate-cut bets.

The Pound Sterling holds gains near 1.2700 amid cheerful market sentiment.UK’s steady wage growth keeps BoE rate-cut context uncertain.An expected decline in the US CPI strengthens Fed rate-cut bets for September.The Pound Sterling (GBP) turns sideways after posting a fresh monthly high near 1.2700 against the US Dollar (USD) in Thursday’s London session. The near-term outlook of the GBP/USD pair is upbeat as uncertainty over the Bank of England (BoE) rate-cut timing has deepened due to stubborn United Kingdom (UK) wage growth. This is a favorable scenario for the Pound Sterling. UK Average Earnings grew steadily in the three months ending March, raising concerns over progress in inflation declining to the desired rate of 2%. High wage growth feeds service inflation, which has remained a major barrier to progress in the disinflation process.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2581 | Positive Crossover | Bullish
  • MA 20 : 1.2555 | Positive Crossover | Bullish
  • MA 50 : 1.2570 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.2565 | Positive Crossover | Bullish
  • MA 20 : 1.2519 | Positive Crossover | Bullish
  • MA 50 : 1.2589 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 62.5051 | Buy Zone | Bullish

Stochastic   Oscillator : 95.08 | 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 : 1.2635 | Take Profit : 1.2717 | Stop Loss : 1.2589

EUR/USD

EUR/USD holds strength amid firm speculation over Fed rate cuts.

EUR/USD clings to gains near 1.0900 due to strong appeal for risk-sensitive assets.Traders expect the ECB reducing interest rates three times this year.Investors shift focus to the US weekly jobless claims data.EUR/USD falls slightly from the crucial resistance of 1.0900 in Thursday’s European session. The major currency pair retraces as the US Dollar (USD) stabilizes after a sharp fall to fresh monthly lows. The US Dollar Index (DXY), which tracks the US Dollar’s value against six major currencies, rebounds to 104.30 after falling to 104.00 earlier on the day. However, the appeal of the US Dollar is downbeat as the Fed is expected to begin lowering interest rates from the September meeting. The Euro remains firm as traders have priced in three rate cuts by the European Central Bank (ECB) this year. Meanwhile, ECB policymakers are also confident that the central bank will start normalizing the monetary policy from June.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0803 | Positive Crossover | Bullish
  • MA 20 : 1.0773 | Positive Crossover | Bullish
  • MA 50 : 1.0777 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.0795 | Positive Crossover | Bullish
  • MA 20 : 1.0745 | Positive Crossover | Bullish
  • MA 50 : 1.0784 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 64.6295 | Buy Zone | Bullish

Stochastic   Oscillator : 91.98 | Buy 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 : 1.0829 | Take Profit : 1.0894 | Stop Loss : 1.0791

USD/CAD

USD/CAD rebounds above 1.3600, focus on US data.

USD/CAD finds support at the 1.3600 psychological level and rebounds to 1.3615 in Thursday’s early European session. The recent softer US inflation and weaker Retail Sales have triggered speculation that Fed may cut rates this year.Canadian Manufacturing Sales data for March fell 2.1% MoM in March from a 0.9% rise in February, worse than expected.The USD/CAD pair recovers some lost ground near 1.3615 on Thursday during the early European trading hours. The modest rebound of US Dollar (USD) provides some support for the pair. Later on Thursday, investors will keep an eye on US Building Permits, Housing Starts, the weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, and Industrial Production. On the CAD’s front, the Canadian Manufacturing Sales data for March came in worse than expected, falling 2.1% MoM from a 0.9% rise in February, Statistics Canada revealed on Wednesday. The downbeat figure exerted some pressure on the Loonie. Nonetheless, the rise in oil prices might cap the downside of the commodity-linked Canadian Dollar (CAD), as Canada is the largest oil exporter to the United States.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.3659 | Negative Crossover | Bearish
  • MA 20 : 1.3669 | Negative Crossover | Bearish
  • MA 50 : 1.3635 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.3668 | Negative Crossover | Bearish
  • MA 20 : 1.3683 | Negative Crossover | Bearish
  • MA 50 : 1.3628 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 45.5669 | Neutral Zone | Neutral

Stochastic   Oscillator : 23.06 | Sell Zone | Positive

Resistance   And Support Levels :

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

Overall Sentiment : Neutral Market Direction : Buy

Trade Suggestion : Stop Buy : 1.3634 | Take Profit : 1.3725 | Stop Loss : 1.3574

USD/JPY

USD/JPY recovers from 153.60 as US Dollar stabilizes after soft US inflation-induced sell off.

The USD/JPY finds buying interest after falling to the day’s low near 153.60 in Thursday’s European session. The asset recovers as the US Dollar stabilizes after a significant fall due to an expected decline in the United States Consumer Price Index (CPI) data for April, which boosted expectations for the Federal Reserve (Fed) to start lowering interest rates from the September meeting.Going forward, investors will focus on the US Initial Jobless Claims data for the week ending May 10. The US Department of Labor is expected to show a decline in number of individuals claiming jobless benefits for the first time to 220K from eight-month high of 231K, for the week ending May 3. On the Japanese Yen front, weaker-than-expected preliminary Q1 Gross Domestic Product (GDP) data has raised concerns over the Bank of Japan’s plans to extend the policy-tightening cycle. The Japanese economy contracted at a faster pace of 0.5% from the consensus of 0.4%. In the last quarter of 2023, the economy remained stagnant.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 155.2203 | Negative Crossover | Bearish
  • MA 20 : 154.8778 | Negative Crossover | Bearish
  • MA 50 : 153.2708 | Positive Crossover | Bullish

Simple :

  • MA 10 : 155.0144 | Negative Crossover | Bearish
  • MA 20 : 155.2594 | Negative Crossover | Bearish
  • MA 50 : 152.8246 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 50.9428 | Buy Zone | Bullish

Stochastic   Oscillator : 9.7 | Sell 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 : Stop Buy : 154.78 | Take Profit : 156.81 | Stop Loss : 153.59

Elsewhere In The Forex Market

AUD/USD down 0.27% to 0.6676, The NZD/USD down 0.2% to 0.6109. The EUR/GBP up 0.1% at 0.8580. EUR/AUD up 0.15% at 0.6285. AUD/NZD down 0.06% at 1.0927, The USD/CNY down 0.3% at 7.2160, AUD/SEK down 0.11% at 7.1306, at the time of writing.

Key Economic Events & Data Release Today:

(JPY) GDP (QoQ) (Q1) Forecast -0.3%, Previous 0.1% at 05:20. (AUD) Employment Change (Apr) Forecast 22.4K, Previous –6.6K at 07:00. (USD) Initial Jobless Claims Forecast 219K, Previous 231K at 18:00. (USD) Building Permits (Apr) Forecast 1.480M, Previous 1.467M at 18:00.