. Daily Forex Analysis - GBP/USD and AUD/USD Decline

Daily Forex Analysis – GBP/USD and AUD/USD Decline

Daily Forex Analysis – GBP/USD and AUD/USD Decline

17 May 2024

Introduction

EUR/USD corrects below 1.0900 as Fed officials maintain hawkish interest-rate guidance, prompting a US Dollar rebound. Fed policymakers see one positive inflation report as insufficient to change the trend, while ECB’s Schnabel warns of risks from premature rate cuts.Pound Sterling drops from 1.2700 as the US Dollar strengthens and attention shifts to UK inflation data. Investors are divided on whether the BoE will cut rates in June or August.The Australian Dollar remains weak following mixed Chinese data and declining Australian bond yields.USD/JPY nears 156.00 as the BoJ maintains bond-buying amounts. The US Dollar strengthens with the Fed cautious on rate cuts, while speculation grows that the BoJ might reduce bond buying at the June policy meeting.

Markets In Focus Today – EUR/USD

EUR/USD corrects as Fed officials maintain hawkish interest-rate guidance.

EUR/USD drops below 1.0900 as the US Dollar rebounds after many Fed officials vow to maintain interest rates at their current levels for longer. Fed policymakers see one good inflation report as insufficient to change the trend. ECB’s Schnabel also highlighted risks from premature interest-rate cuts. EUR/USD drops to 1.0840 in Friday’s European session as market sentiment over upcoming interest-rate cuts turns slightly cautious after Federal Reserve (Fed) policymakers supported keeping the monetary policy stance restrictive for a longer period. These comments helped the US Dollar lick its wounds after the sharp fall induced by the decline in the United States (US) inflation in April, as shown by the Consumer Price Index (CPI) report released on Wednesday. The corrective move in the major currency pair seems purely the outcome of the US Dollar’s recovery. However, the appeal for the Euro also remains upbeat as European Central Bank (ECB) policymakers are also casting doubts over the need to extend the rate-cut cycle immediately after a widely anticipated June rate cut.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0809 | Positive Crossover | Bullish
  • MA 20 : 1.0779 | Positive Crossover | Bullish
  • MA 50 : 1.0779 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.0802 | Positive Crossover | Bullish
  • MA 20 : 1.0754 | Positive Crossover | Bullish
  • MA 50 : 1.0782 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 59.5329 | Buy Zone | Bullish

Stochastic   Oscillator : 37.83 | Sell Zone | Negative

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 : 1.0810 | Take Profit : 1.0879 | Stop Loss : 1.0767

GBP/USD

Pound Sterling comes down from 1.2700 as US Dollar bounces back.

The Pound Sterling falls from 1.2700 as the focus shifts to UK inflation data. Investors expect that the BoE could start reducing interest rates in the June or August meeting. Fed’s hawkish stance on interest rates boosts US Dollar’s recovery. The Pound Sterling (GBP) drops in Friday’s London session after posting a fresh monthly high at 1.2700 on Thursday. The GBP/USD pair fails to extend upside as investors shift focus to the United Kingdom Consumer Price Index (CPI) data for April, which will be published on Wednesday. The UK inflation data will provide fresh cues about the interest rate outlook. Investors remain divided between the June and the August meeting about when the Bank of England (BoE) could start reducing interest rates.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2595 | Positive Crossover | Bullish
  • MA 20 : 1.2565 | Positive Crossover | Bullish
  • MA 50 : 1.2574 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.2576 | Positive Crossover | Bullish
  • MA 20 : 1.2533 | Positive Crossover | Bullish
  • MA 50 : 1.2585 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 60.9051 | Buy Zone | Bullish

Stochastic   Oscillator : 57.67 | Buy Zone | Negative

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 : 1.2608 | Take Profit : 1.2697 | Stop Loss : 1.2559

AUD/USD

Australian Dollar remains tepid after mixed Chinese data, Fedspeak awaited.

The Australian Dollar extends its losses after mixed economic data from China on Friday. The Australian Dollar (AUD) continues to experience a decline for the second consecutive session, largely influenced by recent mixed economic data from China released on Friday. Any economic change in the Chinese economy could catalyze the Australian market as both nations are close trade partners. The Aussie Dollar had already been under pressure after Australia’s employment figures released on Thursday presented a mixed picture. The Australian Dollar’s decline is bolstered as the yield on Australia’s 10-year government bond has dropped to around 4.2%, marking its lowest level in a month. This decline in bond yields is a reaction to the domestic jobs report, which showed an unexpected slowing in wage growth during the first quarter. The slowing wage growth has led markets to discount the possibility of any interest rate hikes by the Reserve Bank of Australia (RBA).

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6626 | Positive Crossover | Bullish
  • MA 20 : 0.6592 | Positive Crossover | Bullish
  • MA 50 : 0.6562 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.6627 | Positive Crossover | Bullish
  • MA 20 : 0.6574 | Positive Crossover | Bullish
  • MA 50 : 0.6549 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 59.6311 | Buy Zone | Bullish

Stochastic   Oscillator : 39.53 | Sell Zone | Negative

Resistance   And Support Levels :

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

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 0.6623 | Take Profit : 0.6691 | Stop Loss : 0.6585

USD/JPY

USD/JPY climbs to near 156.00 as BoJ maintains bond-buying.

USD/JPY appreciates as BoJ maintains its bond-buying amounts from the previous operation. Former BOJ chief economist Toshitaka Sekine suggested the central bank could raise the rate three times in 2024. The US Dollar strengthens as the Fed maintains a cautious stance regarding the prospect of interest rate reductions in the current year. USD/JPY rose to near 155.90 during the Asian session on Friday as the Japanese Yen (JPY) encountered renewed pressure. This was sparked by the Bank of Japan (BoJ) maintaining its bond-buying amounts from the previous operation, opting against a surprise cut to debt purchasing earlier in the week. Traders speculate that the BoJ might reduce bond buying at the June policy meeting. BOJ Governor Kazuo Ueda also mentioned that there are no immediate plans to sell the central bank’s ETF holdings.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 155.4347 | Positive Crossover | Bullish
  • MA 20 : 155.0281 | Positive Crossover | Bullish
  • MA 50 : 153.3971 | Positive Crossover | Bullish

Simple :

  • MA 10 : 155.3712 | Positive Crossover | Bullish
  • MA 20 : 155.3572 | Positive Crossover | Bullish
  • MA 50 : 153.0144 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 56.4047 | Buy Zone | Bullish

Stochastic   Oscillator : 60.82 | Buy Zone | Positive

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 : 156.11 | Take Profit : 158.00 | Stop Loss : 155.06

Elsewhere In The Forex Market

USD/CHF up 0.39% to 0.9096, The NZD/USD down 0.27% to 0.6105. The EUR/GBP up 0.13% at 0.8565. EUR/AUD up 0.13% at 1.6292. AUD/NZD down 0.13% at 1.0895, The USD/CNY up 0.12% at 7.2262, AUD/SEK up 0.07% at 7.1615, at the time of writing.

Key Economic Events & Data Release Today:

(CNY) Industrial Production (YoY) (Apr) Forecast 5.5%, Previous 4.5% at 07:30. (EUR) CPI (YoY) (Apr) Forecast 2.4%, Previous 2.4% at 14:30.