. Daily Forex Analysis - GBP/USD Dips Pre-BoE, EUR/USD Faces Fed Pressure.

Daily Forex Analysis – GBP/USD Dips Pre-BoE, EUR/USD Faces Fed Pressure.

Daily Forex Analysis – GBP/USD Dips Pre-BoE, EUR/USD Faces Fed Pressure.

09 May 2024

Introduction

GBP/USD slips below 1.2500 ahead of the Bank of England’s policy decision. With the BoE expected to maintain interest rates at 5.25%, investor focus remains on wage growth impacting core inflation in the UK. Meanwhile, the US Dollar gains strength amid expectations of the Fed maintaining higher rates and bolstered by hawkish remarks from Fed officials. EUR/USD faces downward pressure amid a hawkish Fed stance, while NZD/USD edges higher following positive Chinese trade data. Additionally, USD/JPY maintains a positive stance above 155.50 after the BoJ’s Summary of Opinions, as policymakers turn hawkish amidst the prospect of multiple rate hikes.

Markets In Focus Today – GBP/USD

GBP/USD moves below 1.2500 ahead of BoE policy decision.

GBP/USD extends its losing streak for the third successive session, trading around 1.2490 during the Asian session on Thursday. Thursday brings the Bank of England (BoE) interest rate decision, with expectations of maintaining interest rate at 5.25%. Investor expectations regarding potential interest rate cuts by the Bank of England (BoE) have been delayed until September, amid concerns about strong wage growth in the United Kingdom (UK). This wage growth is contributing to core inflation, which is the central bank’s preferred inflation measure. The annual inflation rate dropped to 3.2% in March, down from 3.4% in February. However, it stayed slightly above the market expectation of 3.1%. This marked the lowest rate since September 2021. Across the pond, the US Dollar (USD) is gaining ground due to the expectations of the Federal Reserve (Fed) maintaining higher interest rates. Additionally, the higher US Treasury yields support for the US Dollar (USD), undermining the GBP/USD pair.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2507 | Negative Crossover | Bearish
  • MA 20 : 1.2515 | Negative Crossover | Bearish
  • MA 50 : 1.2561 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.2519 | Negative Crossover | Bearish
  • MA 20 : 1.2477 | Positive Crossover | Bullish
  • MA 50 : 1.2600 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 43.07 | Neutral Zone | Neutral

Stochastic   Oscillator : 8.46 | Sell Zone | Neutral

Resistance   And Support Levels :

  • R1 : 1.2657 R2 : 1.2754
  • S1 : 1.2345 S2 : 1.2248

Overall Sentiment : Bearish Market Direction : Sell

Trade Suggestion : Limit Sell : 1.2516 | Take Profit : 1.2473 | Stop Loss : 1.2537

EUR/USD

EUR/USD hovers around 1.0750 with a negative sentiment amid hawkish Fed.

EUR/USD could extend its losses for the third successive session, trading around 1.0750 during the Asian session on Thursday. The US Dollar (USD) appreciates amid expectations of the Federal Reserve’s (Fed) maintaining higher interest rates. Additionally, the higher US Treasury yields support for the US Dollar (USD), undermining the EUR/USD pair. Furthermore, hawkish commentary from Federal Reserve officials has bolstered the US Dollar. According to a Reuters report, Federal Reserve Bank of Boston President Susan Collins stated on Wednesday the necessity for a period of moderation in the US economy to attain the central bank’s 2% inflation target. On Tuesday, Minneapolis Fed President Neel Kashkari mentioned that the prevailing expectation is for rates to remain unchanged for a significant period. While the probability of rate hikes is minimal, it is not entirely discounted. On the Euro front, monthly Retail Sales surged by 0.8% in March, bouncing back from the upwardly revised 0.3% decline in February. This marked the most significant increase in retail activity since September 2022, suggesting strength in the European consumer sector. Furthermore, Retail Sales (YoY) rose by 0.7% compared to the revised 0.5% drop in February, indicating the first growth in retail since September 2022 and signaling a positive shift in consumer spending trends.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0734 | Positive Crossover | Bullish
  • MA 20 : 1.0731 | Positive Crossover | Bullish
  • MA 50 : 1.0764 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.0729 | Positive Crossover | Bullish
  • MA 20 : 1.0696 | Positive Crossover | Bullish
  • MA 50 : 1.0788 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 50.3593 | Buy Zone | Bullish

Stochastic   Oscillator : 6.21 | Sell Zone | Negative

Resistance   And Support Levels :

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

Overall Sentiment : Bearish Market Direction : Sell

Trade Suggestion : Limit Sell : 1.0764 | Take Profit : 1.0707 | Stop Loss : 1.0812

NZD/USD

NZD/USD inches higher to near 0.6000 after Chinese Trade data.

NZD/USD has extended its gains for the second consecutive session, trading around 0.6010 during the Asian session on Thursday. The New Zealand Dollar (NZD) gains ground after the release of the Chinese data on Thursday, given the close trade relationship between New Zealand and China. Chinese Imports (YoY) surged by 8.4% in April, surpassing forecasts of 5.4%. Additionally, Exports grew by 1.5%, higher than the anticipated 1.0% gain projected by analysts. These latest figures brought a positive surprise amidst concerns of potential additional tariffs on Chinese goods by the US. However, Trade Balance USD increased to $72.35 billion from March’s reading of $58.55 billion, slightly below the expected $76.7 billion. In New Zealand, the Reserve Bank of New Zealand (RBNZ) indicated a delay in any potential move toward monetary easing until 2025. The RBNZ cited higher-than-anticipated inflation pressures in the first quarter as a reason for this stance. Such a decision could provide support for the New Zealand Dollar (NZD).

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.5978 | Positive Crossover | Bullish
  • MA 20 : 0.5971 | Positive Crossover | Bullish
  • MA 50 : 0.6003 | Negative Crossover | Bearish

Simple :

  • MA 10 : 0.5971 | Positive Crossover | Bullish
  • MA 20 : 0.5943 | Positive Crossover | Bullish
  • MA 50 : 0.6010 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 53.0377 | Buy Zone | Bullish

Stochastic   Oscillator : 21.03 | Sell Zone | Negative

Resistance   And Support Levels :

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

Overall Sentiment : Neutral Market Direction : Buy

Trade Suggestion : Limit Buy : 0.5975 | Take Profit : 0.6046 | Stop Loss : 0.5932

USD/JPY

USD/JPY holds positive ground above 155.50 following the BoJ Summary of Opinions.

The USD/JPY pair trades in positive territory for the fourth consecutive day around 155.60 during the early Asian trading hours on Thursday. However, the fear of further intervention from the Bank of Japan (BoJ) is likely to cap the downside of the Japanese Yen (JPY) for the time being. The BoJ board members decided to hold the key interest rate steady at 0% at its April monetary policy meeting. According to the Bank of Japan (BoJ) Summary of Opinions, board members turned hawkish at their April policy meeting, with many policymakers calling for a steady interest rate to avoid the risks of inflation overshoot. The statement highlighted BoJ Governor Kazuo Ueda’s recent comments indicating the prospect of multiple rate rises in the coming months, as well as the possibility of an increase in short-term borrowing rates. On the other hand, the monetary policy gap between the United States and Japan continues to support USD/JPY.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 154.9488 | Positive Crossover | Bullish
  • MA 20 : 154.5130 | Positive Crossover | Bullish
  • MA 50 : 152.7832 | Positive Crossover | Bullish

Simple :

  • MA 10 : 155.2794 | Positive Crossover | Bullish
  • MA 20 : 154.9389 | Positive Crossover | Bullish
  • MA 50 : 152.2345 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 58.0914 | Buy Zone | Bullish

Stochastic   Oscillator : 98.9 | Buy Zone | Neutral

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 : 154.45 | Take Profit : 156.01 | Stop Loss : 153.54

Elsewhere In The Forex Market

USD/CAD up 0.09% to 1.3735, The AUD/USD down 0.18% to 0.6567. The EUR/GBP up 0.06% at 0.8605. USD/CHF up 0.6% at 0.9084. AUD/NZD down 0.02% at 1.0956, The USD/CNY up 0.02% at 7.2251, AUD/SEK down 0.02% at 7.1751, at the time of writing.

Key Economic Events & Data Release Today:

(GBP) BoE MPC Meeting Minutes at 16:30. (GBP) Interest Rate Decision (Apr) Forecast 5.25%, Previous 5.25% at 16:30. (GBP) BoE Gov Bailey Speaks at 17:00. (USD) Initial Jobless Claims Forecast 1790K, Previous 1774K at 18:00. (GBP) Boe Gov Bailey Speaks at 18:45.