. Daily Forex Analysis - Pound Sterling Follows Suit while Aussie Dollar Finds Support

Daily Forex Analysis – Pound Sterling Follows Suit while Aussie Dollar Finds Support

Daily Forex Analysis – Pound Sterling Follows Suit while Aussie Dollar Finds Support

29 May 2024

Introduction

The Euro falls against the resurgent US Dollar as investors grow cautious ahead of key inflation data. The ECB and Fed rate cut bets are on hold after hawkish comments from central bank officials. The Pound Sterling also weakens, while the Aussie Dollar finds support on strong inflation figures. Upcoming US data will be crucial for future interest rate expectations.

Markets In Focus Today – EUR/USD

EUR/USD slumps as US Dollar extends recovery after Fed rate-cut bets fade.

EUR/USD dips to near 1.0830 as investors turn cautious ahead of Eurozone/US inflation data. ECB Knot advised the use of a gradual rate-cut approach due to dynamic components such as inflation, demand, and wage growth. The US Dollar bounces back as investors expect the Fed to start reducing interest rates in the last quarter of the year. EUR/USD falls to 1.0830 in Wednesday’s European session after failing to recapture a two-month high near 1.0900 on Tuesday. The major currency pair retraces as the market sentiment turns cautious ahead of the release of the Eurozone preliminary Consumer Price Index (CPI) data for May and the United States (US) core Personal Consumption Expenditure Price Index (PCE) data for April, which will be published on Friday. The Eurozone CPI and US core PCE inflation data will significantly influence market speculation for interest rate cuts by the European Central Bank (ECB) and the US Federal Reserve (Fed).

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0839 | Positive Crossover | Bullish
  • MA 20 : 1.0817 | Positive Crossover | Bullish
  • MA 50 : 1.0798 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.0849 | Negative Crossover | Bearish
  • MA 20 : 1.0814 | Positive Crossover | Bullish
  • MA 50 : 1.0773 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 57.6139 | Buy Zone | Bullish

Stochastic   Oscillator : 73.0131 | Buy 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 : 1.0812 | Take Profit : 1.0887 | Stop Loss : 1.0765

GBP/USD

Pound Sterling edges down as US core PCE inflation data comes into picture.

The Pound Sterling drops after facing selling pressure near 1.2800 due to multiple tailwinds. A soft UK inflation outlook could prompt the BoE to start unwinding higher interest rates. The US Dollar recovers amid uncertainty ahead of the US core PCE price index. The Pound Sterling (GBP) corrects to 1.2750 against the US Dollar (USD) in Wednesday’s London session after posting a fresh 10-week high at 1.2800 on Tuesday. The rally in the GBP/USD pair stalls as the United Kingdom (UK) inflation outlook softens and the US Dollar (USD) comes out of the woods. UK shop price inflation data from the British Retail Consortium (BRC) indicated that prices of food and non-food items eased significantly in May. Annual shop price changes in the popular retail outlets in the UK grew by 0.6%, the slowest pace since November 2021, from the prior reading of 0.8%. Food price inflation dropped for the 13th straight month, declining to 3.2% from 3.4% in April. The agency noted that retailers are passing the benefit of lower prices to consumers.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2714 | Positive Crossover | Bullish
  • MA 20 : 1.2662 | Positive Crossover | Bullish
  • MA 50 : 1.2619 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.2722 | Positive Crossover | Bullish
  • MA 20 : 1.2637 | Positive Crossover | Bullish
  • MA 50 : 1.2580 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 67.2378 | Buy Zone | Bullish

Stochastic   Oscillator : 31.13 | Sell 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 : 1.2733 | Take Profit : 1.2799 | Stop Loss : 1.2695

AUD/USD

Australian Dollar appreciates, while US Dollar remains steady ahead of Fed’s Beige Book.

The Australian Dollar appreciated after the higher-than-expected consumer inflation was released on Wednesday. Australia’s Monthly Consumer Price Index rose 3.6% YoY in April, surpassing the expected readings of 3.4% and 3.5% prior. The US Dollar rebounded due to higher US Treasury yields. The Australian Dollar (AUD) pared its daily losses after the higher-than-expected Monthly Consumer Price Index was released on Wednesday. This strong data could prompt the Reserve Bank of Australia (RBA) to consider another rate hike. The minutes from the RBA’s May policy meeting suggested that the central bank had contemplated a potential interest rate increase. The Australian Dollar struggled during earlier Asian hours due to increased risk aversion, evidenced by the stronger US Dollar (USD). This strength in the USD can be linked to rising US Treasury yields. The US Dollar Index (DXY), which measures the USD against six major currencies, was trading higher around, 104.70, with 2-year and 10-year US Treasury yields at 4.96% and 4.54%, respectively, at the time of reporting.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6640 | Positive Crossover | Bullish
  • MA 20 : 0.6620 | Positive Crossover | Bullish
  • MA 50 : 0.6585 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.6650 | Negative Crossover | Bearish
  • MA 20 : 0.6630 | Positive Crossover | Bullish
  • MA 50 : 0.6559 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 56.3470 | Buy Zone | Bullish

Stochastic   Oscillator : 55.9236 | Buy 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 : 0.6630 | Take Profit : 0.6704 | Stop Loss : 0.6592

NZD/USD

NZD/USD flattens out near 0.6140 after testing 11-week high.

Easing Greenback pressure gives Kiwi another leg into fresh highs. Momentum remains thin as NZD rtaders grapple with a lack of data. US GDP, PCE inflation prints to dominate the last half of the trading week. NZD/USD eased back into the 0.6140 level in early Wednesday trading as Kiwi traders await a reason to move. The economic calendar is notably thin except for the NZ government’s latest Budget Release on Thursday, leaving NZD traders adrift until Friday’s speech from Reserve Bank of New Zealand (RBNZ) Governor Orr. US data in the back half of the trading week will drive investor sentiment with an update to US quarterly Gross Domestic Product (GDP) and the latest print of Personal Consumption Expenditure (PCE) Price Index inflation.Investors have been awaiting signs of movement from the Federal Reserve (Fed) on rate cuts, with markets broadly keeping an eye on a flurry of appearances from Fed officials in the early week.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6112 | Positive Crossover | Bullish
  • MA 20 : 0.6077 | Positive Crossover | Bullish
  • MA 50 : 0.6047 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.6119 | Positive Crossover | Bullish
  • MA 20 : 0.6070 | Positive Crossover | Bullish
  • MA 50 : 0.6006 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 64.9044 | Buy Zone | Bullish

Stochastic   Oscillator : 87.0216 | Buy 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 : 0.6105 | Take Profit : 0.6168 | Stop Loss : 0.6071

Elsewhere In The Forex Market

USD/CHF up 0.02% to 0.9126, The USD/JPY down 0.04% to 0.157. The EUR/GBP down 0.07% at 0.8500. EUR/AUD down 0.04% at 1.6320. AUD/NZD down 0.01% at 1.0827, The USD/CNY down 0.06% at 7.2485, AUD/SEK up 0.18% at 7.0448, at the time of writing.

Key Economic Events & Data Release Today:

(EUR) German CPI (MoM) (May) Forecast 0.2%, Previous 0.5% at 17:30.