. Daily Forex Analysis - NZD/USD, and USD/CAD in Focus

Daily Forex Analysis – NZD/USD, and USD/CAD in Focus

Daily Forex Analysis – NZD/USD, and USD/CAD in Focus

21 May 2024

Introduction

The foreign exchange market is on hold ahead of key central bank events. The Euro (EUR) and British Pound (GBP) hold steady against the US Dollar (USD) as investors await speeches from ECB President Lagarde and Fed officials. The focus is on Wednesday’s FOMC minutes and inflation data releases from the UK and Canada. The Reserve Bank of New Zealand (RBNZ) policy meeting is also on tap, with the expectation of steady rates. The Canadian Dollar (CAD) weakens on bets of future rate cuts by the Bank of Canada (BoC).

Markets In Focus Today – EUR/USD

EUR/USD remains firm ahead of ECB’s Lagarde speech, Fed Minutes.

EUR/USD holds positive ground near 1.0860 in Tuesday’s early European session on Monday. The markets expect the Fed’s policy rate on hold until September.ECB’s Schnabel said policymakers should look very carefully at the data as there is a risk of easing prematurely. The EUR/USD pair trades on a stronger note around 1.0860 during the early European trading hours on Tuesday. Investors will focus on Fedspeaker amid the absence of key US data releases. On Wednesday, European Central Bank (ECB) President Christine Lagarde’s speech and the minutes from the recent FOMC meeting will take center stage. The Federal Reserve (Fed) officials are confident to say inflation is heading to the 2% target after the US inflation report last week. Fed Vice Chair Philip Jefferson said on Monday that it’s premature to tell whether the recent slowdown in the disinflationary process will be long-lasting, highlighting that he will be carefully assessing incoming economic data and the outlook. Meanwhile, Atlanta Fed, Fed Vice Chair Michael Barr stated that disappointing first-quarter inflation data did not provide the Fed with the increased confidence to support easing monetary policy.”

Technical   Overview With Chart :|

Moving Averages :

Exponential :

  • MA 10 : 1.0829 | Positive Crossover | Bullish
  • MA 20 : 1.0796 | Positive Crossover | Bullish
  • MA 50 : 1.0786 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.0824 | Positive Crossover | Bullish
  • MA 20 : 1.0773 | Positive Crossover | Bullish
  • MA 50 : 1.0780 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 62.7905 | Buy Zone | Bullish

Stochastic   Oscillator : 4.4 | 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 : Stop Buy : 1.0872 | Take Profit : 1.0939 | Stop Loss : 1.0832

GBP/USD

GBP/USD extends its upside above 1.2700, investors await fresh catalysts.

GBP/USD holds positive ground around 1.2710 in Tuesday’s early Asian session. Fed officials remain cautious about the timing of rate cuts, emphasizing the need to hold rates higher for longer. The UK CPI inflation is expected to ease to 2.1% YoY in April from 3.2% prior. The GBP/USD pair extends the rally near 1.2710 on Tuesday during the early Asian session. Investors await fresh catalysts, with different Federal Reserve (Fed) speakers set to speak later in the day. On Wednesday, the UK Consumer Price Index (CPI) inflation data and FOMC Minutes will be closely watched. The Greenback trades steady on Tuesday amid the absence of top-tier economic data releases from the US and the UK. The Fed officials remain cautious about the timing of its easing cycle and emphasize the need to hold rates higher for longer to gain confidence that inflation is on course toward the target. The upcoming FOMC minutes on Wednesday will take center stage as they might offer some clues about the future interest rate path.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2639 | Positive Crossover | Bullish
  • MA 20 : 1.2595 | Positive Crossover | Bullish
  • MA 50 : 1.2586 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.2615 | Positive Crossover | Bullish
  • MA 20 : 1.2567 | Positive Crossover | Bullish
  • MA 50 : 1.2582 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 66.2592 | Buy Zone | Bullish

Stochastic   Oscillator : 58.5 | 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 : Stop Buy : 1.2726 | Take Profit : 1.2801 | Stop Loss : 1.2683

NZD/USD

NZD/USD falls to near 0.6100 as RBNZ expects to keep rates unchanged.

NZD/USD depreciates due to the hawkish remarks from Fed officials regarding maintaining higher rates for longer.RBNZ is expected to maintain its Official Cash Rate at 5.5%, marking the seventh consecutive meeting without changes.Fed maintains a cautious stance regarding inflation and the possibility of rate cuts in 2024.NZD/USD extended losses to near 0.6100 during Asian trading hours on Tuesday. Investors are awaiting the Reserve Bank of New Zealand’s (RBNZ) policy meeting scheduled for Wednesday. It’s widely anticipated that the RBNZ will maintain its Official Cash Rate (OCR) at 5.5%, marking the seventh consecutive meeting without changes. Policymakers are expected to emphasize the necessity of maintaining a restrictive policy stance for an extended period to steer inflation back within the 1-3% target range. Recent data showed a decline in the country’s 2-year inflation expectations to their lowest point in nearly three years during the second quarter. This has fueled speculation that the RBNZ might contemplate rate cuts later in 2024.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6074 | Positive Crossover | Bullish
  • MA 20 : 0.6038 | Positive Crossover | Bullish
  • MA 50 : 0.6027 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.6069 | Positive Crossover | Bullish
  • MA 20 : 0.6014 | Positive Crossover | Bullish
  • MA 50 : 0.6003 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 62.9867 | Buy Zone | Bullish

Stochastic   Oscillator : 8.53 | Sell Zone | Negative

Resistance   And Support Levels :

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

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 0.6080 | Take Profit : 0.6143 | Stop Loss : 0.6044

USD/CAD

Canadian Dollar loses ground below 1.3650, eyes on Canadian CPI data.

USD/CAD edges higher to 1.3630 amid the modest rebound in USD on Tuesday.The higher bets on rate cuts from the BoC and the decline in oil prices weigh on the Loonie.The USD/CAD pair trades in positive territory for the second consecutive day around 1.3630 on Tuesday during the early European session. Market players await the remarks from more FOMC members. Also, the Canadian CPI inflation report for April will be in the spotlight. The markets expect further cooling of CPI inflation figures on both an annual and monthly basis to convince the Bank of Canada (BOC) to cut interest rates next month. The Canadian central bank is anticipated to cut interest rates 2-3 times before the Fed’s first rate cut, which might weigh on the Loonie and create a tailwind for the USD/CAD pair. Canada’s CPI inflation is expected to ease to 2.7% YoY in April from 2.9% in the previous reading, while the monthly CPI inflation is estimated to drop to 0.5% MoM in April from 0.6% in March.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.3641 | Negative Crossover | Bearish
  • MA 20 : 1.3655 | Negative Crossover | Bearish
  • MA 50 : 1.3633 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.3646 | Negative Crossover | Bearish
  • MA 20 : 1.3670 | Negative Crossover | Bearish
  • MA 50 : 1.3636 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 45.9223 | Neutral Zone | Neutral

Stochastic   Oscillator : 89.51 | Buy Zone | Positive

Resistance   And Support Levels :

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

Overall Sentiment : Bearish Market Direction : Sell

Trade Suggestion : Stop Sell : 1.3620 | Take Profit : 1.3564 | Stop Loss : 1.3668

Elsewhere In The Forex Market

AUD/USD down 0.02% to 0.6668, The USD/JPY down 0.09% to 156.09. The EUR/GBP down 0.01% at 0.8542. EUR/AUD up 0.06% at 1.6291. AUD/NZD up 0.01% at 1.0920, The USD/CNY up 0.04% at 7.2369, AUD/SEK down 0.15% at 7.1166, at the time of writing.

Key Economic Events & Data Release Today:

(AUD) RBA Meeting Minutes at 07:00. (EUR) German PPI (MoM) (Apr) Forecast 0.3%, Previous 0.2% at 11:30. (EUR) ECB President Lagarde Speaks at 13:30. (CAD) CPI (MoM) (Apr) Forecast 0.5%, Previous 0.6% at 18:00. (CAD) Core CPI (MoM) (Apr) Previous 0.5% at 18:00. (GBP) Gov Bailey Speaks at 22:30.