. Daily FX Analysis - Forex trends, inflation, central bank decisions.

Daily FX Analysis – Forex trends, inflation, central bank decisions.

Daily FX Analysis – Forex trends, inflation, central bank decisions.

20 Mar 2024

Introduction

Amidst soft UK inflation data, GBP/USD remains above 1.2700, indicating resilience despite challenges. Meanwhile, EUR/USD maintains stability above 1.0850 ahead of significant policy decisions from the Fed and ECB. USD/CAD gains momentum above 1.3570, fueled by expectations of unchanged Fed rates and concerns over Canada’s CPI figures. Additionally, the Australian Dollar faces pressure amid a steady US Dollar and awaited Fed decision, despite RBA’s decision to maintain interest rates.

Markets In Focus Today – GBP/USD

GBP/USD holds above 1.2700 after soft UK inflation data.

GBP/USD tested 1.2700 in the early European session on Wednesday but managed to hold above that level. The data from the UK showed that the annual CPI inflation declined to 3.4% in February from 4% in January, coming in below the market expectation of 3.6%. Following Monday’s indecisive action, GBP/USD lost its traction and dropped to its lowest level in nearly two weeks below 1.2700. The near-term technical outlook suggests that the pair is about to turn oversold. Ahead of the Fed and the BoE policy decisions, the UK’s Office for National Statistics will release Consumer Price Index (CPI) data for February early Wednesday. Yearly, the annual CPI inflation in the UK is forecast to soften to 3.6% from 4% in January.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2740 | Negative Crossover | Bearish
  • MA 20 : 1.2724 | Negative Crossover | Bearish
  • MA 50 : 1.2685 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.2773 | Negative Crossover | Bearish
  • MA 20 : 1.2724 | Negative Crossover | Bearish
  • MA 50 : 1.2685 | Positive Crossover | Bullish

RSI (Relative Strength Index): 50.5327 | Buy Zone | Bullish

Stochastic   Oscillator : 41.3832 | Neutral Zone | Positive

Resistance   And Support Levels :

  • R1 : 1.2735 R2 : 1.2794
  • S1 : 1.2541 S2 : 1.2482

Overall Sentiment: Neutral Market Direction: Buy

Trade Suggestion: Limit Buy: 1.2696 | Take Profit: 1.2809 | Stop Loss: 1.2627

EUR/USD

EUR/USD holds steady above 1.0850 ahead of Lagarde, Fed decision.

EUR/USD is trading in a tight range above 1.0850 in early Europe on Wednesday. The US Dollar holds steady after the recent upsurge, awaiting the key Fed interest rate decision and Chair Powell’s presser. Meanwhile, the Euro looks to ECB President Lagarde’s speech for fresh impetus. The continued upward momentum in the Greenback exerted pressure on riskier assets, bolstering the US Dollar Index (DXY) and maintaining EUR/USD price action subdued well below the 1.0900 level on Tuesday. The US Dollar’s (USD) extra strength came in contrast with the bearish performance in US yields across various maturity periods and marginal moves in German 10-year bund yields.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0884 | Negative Crossover | Bearish
  • MA 20 : 1.0873 | Negative Crossover | Bearish
  • MA 50 : 1.0859 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.0906 | Negative Crossover | Bearish
  • MA 20 : 1.0874 | Negative Crossover | Bearish
  • MA 50 : 1.0846 | Positive Crossover | Bullish

RSI (Relative Strength Index): 50.0326 | Buy Zone | Bullish

Stochastic   Oscillator : 38.6307 | Neutral Zone | Positive

Resistance   And Support Levels :

  • R1 : 1.0876 R2 : 1.0924
  • S1 : 1.0722 S2 : 1.0674

Overall Sentiment : Neutral Market Direction: Buy

Trade Suggestion: Limit Buy: 1.0854 | Take Profit: 1.0936 | Stop Loss: 1.0806

USD/CAD

USD/CAD gains momentum above 1.3570, with eyes on the Fed rate decision.

USD/CAD holds positive ground near 1.3578 in Wednesday’s Asian session. Fed is anticipated to keep rates steady in a range of 5.25% to 5.5% at its policy meeting on Wednesday. The downbeat Canada’s CPI inflation data boosted expectations for a June rate cut from the BoC. The USD/CAD pair gains momentum above the mid-1.3500s during the early Asian trading hours on Wednesday. The uptick of the pair is bolstered by the firmer US Dollar (USD) and cooler-than-expected Canadian Consumer Price Index (CPI) inflation data. Investors will closely monitor the Federal Reserve interest rate decision on Wednesday, with no change in rate expected. At the press time, the pair is trading at 1.3578, up 0.09% on the day. On the other hand, weaker-than-expected Canada’s CPI inflation data boosted expectations for a June rate cut from the Bank of Canada (BoC), which exerts some selling pressure on the Canadian Dollar (CAD). Following the data, money markets have priced in a 75% chance that the BoC will start cutting rates in June, up from 50% before the release.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.3534 | Positive Crossover | Bullish
  • MA 20 : 1.3522 | Positive Crossover | Bullish
  • MA 50 : 1.3500 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.3513 | Positive Crossover | Bullish
  • MA 20 : 1.3526 | Positive Crossover | Bullish
  • MA 50 : 1.3490 | Positive Crossover | Bullish

RSI (Relative Strength Index): 58.9753 | Buy Zone | Bullish

Stochastic   Oscillator : 71.4697 | Buy Zone | Negative

Resistance   And Support Levels :

  • R1 : 1.3607 R2 : 1.3664
  • S1 : 1.3424 S2 : 1.3367

Overall Sentiment: Bullish Market Direction: Buy

Trade Suggestion: Stop Buy: 1.3593 | Take Profit: 1.3676 | Stop Loss: 1.3548

AUD/USD

Australian Dollar falls amid a steady US Dollar, Fed decision awaited.

The Australian Dollar could lose ground amid a volatile ASX 200 index on Wednesday.RBA’s Bullock emphasized that the fight against inflation is still ongoing.PBoC has kept the interest rate unchanged at 3.45%.FOMC could maintain its key cash rates within a range of 5.25% to 5.50%. The Australian Dollar (AUD) has rebounded from intraday losses and is striving to shift into positive territory on Wednesday. The volatile ASX 200 may have lent support to the AUD, thereby bolstering the AUD/USD pair. However, the robust US Dollar could be exerting downward pressure on the pair. The Reserve Bank of Australia (RBA) has chosen to maintain interest rates at a 12-year high of 4.35% on Tuesday, consistent with its stance for the third consecutive meeting. RBA Governor Michele Bullock emphasized that the battle against inflation is ongoing.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6560 | Negative Crossover | Bearish
  • MA 20 : 0.6559 | Negative Crossover | Bearish
  • MA 50 : 0.6566 | Negative Crossover | Bearish

Simple :

  • MA 10 : 0.6584 | Negative Crossover | Bearish
  • MA 20 : 0.6556 | Negative Crossover | Bearish
  • MA 50 : 0.6557 | Negative Crossover | Bearish

RSI (Relative Strength Index): 44.5543 | Neutral Zone | Neutral

Stochastic   Oscillator : 33.0175 | Sell Zone | Negative

Resistance   And Support Levels :

  • R1 : 0.6580 R2 : 0.6620
  • S1 : 0.6453 S2 : 0.6413

Overall Sentiment: Bearish Market Direction: Sell

Trade Suggestion: Stop Sell: 0.6517 | Take Profit: 0.6451 | Stop Loss: 0.6573

Elsewhere In The Forex Market

NZD/USD down 0.11% to 0.6046, The USD/CHF up 0.1% to 0.8889. The EUR/GBP up 0.11% at 0.8550. USD/JPY up 0.36% at 151.37. AUD/NZD is up 0.14% at 1.0803, The USD/CNY is up 0.01% at 7.1988, and AUD/SEK is up 0.03% at 6.8107, at the time of writing.

Key Economic Events & Data Release Today:

(GBP) CPI (YoY) Feb) Actual Forecast 3.5%, Previous 4.0% at 03:00. (EUR) ECB President Lagarde Speaks at 04:45. (USD) Fed Interest Rate Decision Forecast 5.50%, Previous 5.50% at 14:00. (USD) FOMC Statement at 14:00. (USD) FOMC Press Conference at 14:30. (NZD) GDP (QoQ) (Q4) Forecast 0.1%, Previous –0.3% at 17:45. (AUD) Employment Change (Feb) Forecast 40.2K, Previous 0.5K at 20:30.