. Daily FX Analysis - Forex currencies sway amid policy shifts.

Daily FX Analysis – Forex currencies sway amid policy shifts.

Daily FX Analysis – Forex currencies sway amid policy shifts.

29 Apr 2024

Introduction

Amidst a shift towards upward momentum, the EUR/USD holds steady above 1.0700, rebounding from previous losses. Technical analysis suggests a waning bearish sentiment, with the pair breaching the pivotal 1.0700 level. Recent US inflation data has tempered expectations of Fed rate cuts, influencing market sentiment. Conversely, the GBP gains against the USD as the Bank of England’s stance on inflation and interest rates remains uncertain. Meanwhile, the JPY stages a remarkable recovery, and the AUD maintains its upward trajectory, driven by hawkish sentiments surrounding the RBA. As the US Dollar Index retraces gains, a risk-on sentiment appears to dominate the market.

Markets In Focus Today – EUR/USD

EUR/USD Keeps steady above 1.0700 amid a shift to upward momentum.

EUR/USD recovered its recent losses registered in the previous session, trading around 1.0720 during the Asian session on Monday. From a technical perspective, analysis indicates a weakening bearish sentiment for the pair as it continues to advance within the descending channel, breaching the key psychological level of 1.0700. The recent US inflation data dialed back their expectation of when the Federal Reserve (Fed) will start cutting interest rates. According to the CME FedWatch tool, the chance of a rate cut by the July meeting falls from 50% last week to 25%, while traders have priced in nearly 60% odds that the Fed will cut the interest rate at its September meeting. This, in turn, might lift the Greenback and cap the upside of the EUR/USD pair in the near term. Across the pond, the European Central Bank (ECB) emphasized cooler inflation in the Eurozone and signaled that the ECB might cut interest rates before the Fed. ECB President Christine Lagarde hinted that the central bank is still likely to begin lowering its deposit rate from a record-high 4% in June, but has been careful to leave open its options for the path beyond.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0700 | Positive Crossover | Bullish
  • MA 20 : 1.0722 | Negative Crossover | Bearish
  • MA 50 : 1.0774 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.0677 | Positive Crossover | Bullish
  • MA 20 : 1.0725 | Negative Crossover | Bearish
  • MA 50 : 1.0803 | Negative Crossover | Bearish

RSI (Relative Strength Index): 47.4920 | Neutral Zone | Neutral

Stochastic   Oscillator : 40.2952 | Neutral Zone | Negative

Resistance   And Support Levels :

  • R1 : 1.0928 R2 : 1.0978
  • S1 : 1.0765 S2 : 1.0715

Overall Sentiment: Bearish Market Direction: Sell

Trade Suggestion: Limit Sell: 1.0732 | Take Profit: 1.0677 | Stop Loss: 1.0776

GBP/USD

Pound Sterling advances as US Dollar drops ahead of Fed policy meeting.

The Pound Sterling (GBP) prints a fresh two-week high against the US Dollar (USD) near 1.2550 in Monday’s London session. The GBP/USD pair advances due to cheerful market sentiment and a decline in the US Dollar. The Cable strengthens as mixed guidance from Bank of England (BoE) policymakers over the inflation outlook increases uncertainty about when the BoE will start its interest rate cuts cycle. BoE Deputy Governor Dave Ramsden said in mid-April that the risks of inflation remaining elevated have receded. Ramsden predicted headline inflation would return to the 2% target in May and said it would likely remain at this level for the next two years. Investors see the BoE pivoting to interest rate cuts in the June or August meeting. The Fed’s policy decision on Wednesday and the NFP report on Friday will be the key events this week.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2482 | Positive Crossover | Bullish
  • MA 20 : 1.2512 | Positive Crossover | Bullish
  • MA 50 : 1.2577 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.2449 | Positive Crossover | Bullish
  • MA 20 : 1.2515 | Positive Crossover | Bullish
  • MA 50 : 1.2621 | Negative Crossover | Bearish

RSI (Relative Strength Index): 50.0574 | Buy Zone | Bullish

Stochastic   Oscillator : 52.2065 | Buy Zone | Neutral

Resistance   And Support Levels :

  • R1 : 1.2819 R2 : 1.2894
  • S1 : 1.2576 S2 : 1.2501

Overall Sentiment: Neutral Market Direction: Sell

Trade Suggestion: Limit Sell: 1.2544 | Take Profit: 1.2447 | Stop Loss: 1.2625

USD/JPY

Japanese Yen sticks to strong intraday recovery gains near 155.00 against USD.

The Japanese Yen (JPY) witnessed a dramatic intraday turnaround against its American counterpart and rallied over 500 pips from the lowest level since October 1986 touched earlier this Monday. A possible intervention by Japanese authorities, though no official announcement has been made so far, to support the domestic currency was cited as a key factor behind the sharp recovery. Apart from this, the emergence of fresh US Dollar (USD) selling exerts heavy downward pressure on the USD/JPY pair. The downside for the USD, however, remains cushioned in the wake of growing acceptance that the Federal Reserve (Fed) will delay cutting rates amid still sticky inflation in the US. This marks a big divergence in comparison to the Bank of Japan’s (BoJ) uncertain rate outlook and suggests that the big US-Japan rate differential will remain for some time. Apart from this, a positive risk tone caps the safe-haven JPY and assists the USD/JPY pair in attracting some buyers near the 155.00 psychological mark.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 155.2946 | Positive Crossover | Bullish
  • MA 20 : 154.1338 | Positive Crossover | Bullish
  • MA 50 : 152.0137 | Positive Crossover | Bullish

Simple :

  • MA 10 : 155.2626 | Positive Crossover | Bullish
  • MA 20 : 153.7977 | Positive Crossover | Bullish
  • MA 50 : 151.5203 | Positive Crossover | Bullish

RSI (Relative Strength Index): 63.5451 | Buy Zone | Bullish

Stochastic   Oscillator : 80.6380 | Buy Zone | Negative

Resistance   And Support Levels :

  • R1 : 152.0153 R2 : 153.3100
  • S1 : 147.8240 S2 : 146.5293

Overall Sentiment: Bullish Market Direction: Buy

Trade Suggestion: Limit Buy: 155.13 | Take Profit: 157.84 | Stop Loss: 153.24

AUD/USD

The Australian Dollar offers some gains despite the tepid US Dollar.

The Australian Dollar (AUD) continued its winning streak on Monday that began on April 22, trading around the three-week high of 0.6560. The AUD’s upward momentum is fueled by increasing hawkish sentiment surrounding the Reserve Bank of Australia (RBA), spurred by last week’s CPI inflation data surpassing expectations. The Australian Financial Review reported that Warren Hogan, chief economic adviser at Judo Bank, anticipated that the RBA could implement three cash rate hikes throughout 2024, ultimately reaching 5.1%, with the initial increase likely occurring in August. Investors are likely awaiting the March Retail Sales data, scheduled for release on Tuesday, as it provides insight into Australia’s consumer spending habits, significantly impacting inflation and GDP trends. The US Dollar Index (DXY), which measures the performance of the US Dollar (USD) against six major currencies, retraces its recent gains, possibly reflecting a shift toward risk-on sentiment in the market.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6503 | Positive Crossover | Bullish
  • MA 20 : 0.6504 | Positive Crossover | Bullish
  • MA 50 : 0.6526 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.6472 | Positive Crossover | Bullish
  • MA 20 : 0.6507 | Positive Crossover | Bullish
  • MA 50 : 0.6532 | Positive Crossover | Bullish

RSI (Relative Strength Index): 57.2721 | Buy Zone | Bullish

Stochastic   Oscillator : 63.2615 | Buy Zone | Neutral

Resistance   And Support Levels :

  • R1 : 0.6628 R2 : 0.6673
  • S1 : 0.6483 S2 : 0.6438

Overall Sentiment: Bullish Market Direction: Buy

Trade Suggestion: Limit Buy: 0.6544 | Take Profit: 0.6620 | Stop Loss: 0.6498

Elsewhere In The Forex Market

NZD/USD up 0.45% to 0.5966, The USD/CHF down 0.25% to 0.9117. The EUR/GBP is down 0.05% at 0.8554. USD/CAD is down 0.08% at 1.3656. AUD/NZD is down 0.01% at 1.0999, The USD/CNY is up 0.09% at 7.2450, and the AUD/SEK is up 0.21% at 7.1662, at the time of writing.

Key Economic Events & Data Release Today:

(EUR) German CPI (MoM) (Apr) Forecast 0.6%, Previous 0.4% at 17:30.