. Daily FX Analysis - Global Forex Market Reacts to Dovish Fed Comments.

Daily FX Analysis – Global Forex Market Reacts to Dovish Fed Comments.

Daily FX Analysis – Global Forex Market Reacts to Dovish Fed Comments.

02 May 2024

Introduction

EUR/USD maintains its position above 1.0700 amidst expectations of the Fed refraining from additional rate hikes. The pair advances on Thursday, buoyed by a positive market sentiment, partly driven by Federal Reserve Chairman Jerome Powell’s dovish comments on Wednesday. Powell’s remarks suggested a reluctance towards further rate hikes, following the Fed’s decision to keep rates unchanged at 5.25%-5.50% in May. As the EUR/USD pair inches closer to 1.0720 in the Asian session, traders await key US economic data, including Weekly Initial Jobless Claims, Nonfarm Productivity, and Factory Orders, for further market insights.

Markets In Focus Today – EUR/USD

EUR/USD remains above 1.0700 amid expectations of Fed refraining from further rate hikes.

EUR/USD continues to gain ground on Thursday as the prevailing positive sentiment in the market provides support for risk-sensitive currencies like the Euro. This improved risk appetite could be attributed to dovish remarks from Federal Reserve Chairman Jerome Powell on Wednesday. Powell dismissed the likelihood of a further interest rate hike after the Fed decided to maintain interest rates at 5.25%-5.50% in May’s meeting held on Wednesday. The EUR/USD pair inches higher to near 1.0720 during the Asian trading session. According to a Reuters report, Federal Reserve Chairman Jerome Powell said that progress on inflation has recently stalled, suggesting that it would take more time than previously anticipated to bring inflation down to the central bank’s 2% target. Powell also mentioned that if robust hiring persists and inflation remains stagnant, it would justify delaying rate cuts. Traders are likely awaiting weekly Initial Jobless Claims, Nonfarm Productivity, and Factory Orders from the United States (US) on Thursday. These releases will likely provide further insights into the state of the United States (US) economy.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0698 | Positive Crossover | Bullish
  • MA 20 : 1.0715 | Negative Crossover | Bearish
  • MA 50 : 1.0765 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.0692 | Positive Crossover | Bullish
  • MA 20 : 1.0707 | Negative Crossover | Bearish
  • MA 50 : 1.0796 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 46.8092 | Neutral Zone | Neutral

Stochastic   Oscillator : 60.9449 | Neutral Zone | Positive

Resistance   And Support Levels :

  • R1 : 1.0827 R2 : 1.0894
  • S1 : 1.0610 S2 : 1.0543

Overall Sentiment : Bearish Market Direction : Sell

Trade Suggestion : Limit Sell : 1.0731 | Take Profit : 1.0656 | Stop Loss : 1.0793

GBP/USD

Pound Sterling clings to gains on Fed’s less hawkish interest-rate guidance.

The Pound Sterling (GBP) capitalizes on cheerful market sentiment and holds gains above the crucial resistance of 1.2500 in Thursday’s London session. The GBP/USD pair is slightly down from its previous close of 1.2526, but clings to recent gains. This strength in the Cable is driven by a weaker US Dollar, which was battered by the Federal Reserve’s (Fed) guidance on interest rates, which was less hawkish than feared, after keeping them unchanged for the sixth straight time. The commentary from Fed Chair Jerome Powell in the press conference after the monetary policy meeting showed that he still sees the central bank pivoting to interest rate cuts this year even though he remains worried over stalling progress in inflation declining to the 2% target. When asked about the Fed’s stance on interest rate cuts, Jerome Powell said that he expects inflation to fall over the course of the year, but that “my confidence in that is lower than it was.” The BoE is expected to hold interest rates steady at 5.25% for the straight sixth time at its May 9 meeting.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2499 | Positive Crossover | Bullish
  • MA 20 : 1.2514 | Positive Crossover | Bullish
  • MA 50 : 1.2570 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.2473 | Positive Crossover | Bullish
  • MA 20 : 1.2500 | Positive Crossover | Bullish
  • MA 50 : 1.2614 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 48.9024 | Neutral Zone | Neutral

Stochastic   Oscillator : 77.9888 | Buy Zone | Positive

Resistance   And Support Levels :

  • R1 : 1.2658 R2 : 1.2754
  • S1 : 1.2345 S2 : 1.2249

Overall Sentiment : Bearish Market Direction : Sell

Trade Suggestion : Limit Sell : 1.2538 | Take Profit : 1.2463 | Stop Loss : 1.2592

USD/CHF

USD/CHF remains under selling pressure below 0.9150 following Swiss CPI data.

The USD/CHF pair faces some selling pressure on Thursday, supported by the hotter-than-expected Swiss inflation data. The pair currently trades around 0.9110, down 0.48% on the day. Furthermore, the softer US Dollar (USD) came after the US Federal Reserve (Fed) held interest rates at their current levels, adding further downside to the pair. The inflation in Switzerland came in hotter than expected in April, according to the Federal Statistical Office of Switzerland on Thursday. The Swiss Consumer Price Index (CPI) inflation rose to 1.4% YoY in April from a rise of 1.0% in March. On a monthly basis, the Swiss CPI figure increased by 0.3% MoM in April, above the market consensus of 0.1%. In response to the data, the Swiss Franc (CHF) attracts some buyers and drags the USD/CHF pair to the 0.9100 support level. The US Nonfarm Payrolls (NFP) for April will be in the spotlight on Friday.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.9133 | Negative Crossover | Bearish
  • MA 20 : 0.9103 | Positive Crossover | Bullish
  • MA 50 : 0.9001 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.9131 | Negative Crossover | Bearish
  • MA 20 : 0.9112 | Positive Crossover | Bullish
  • MA 50 : 0.8979 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 56.6080 | Buy Zone | Bullish

Stochastic   Oscillator : 26.31 | Sell Zone | Negative

Resistance   And Support Levels :

  • R1 : 0.9203 R2 : 0.9249
  • S1 : 0.9052 S2 : 0.9006

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 0.9089 | Take Profit : 0.9222 | Stop Loss : 0.9008

USD/JPY

Japanese Yen maintains its offered tone, bears remain cautious amid suspected intervention.

The Japanese Yen (JPY) trims a part of its intraday losses against its American counterpart, albeit remains depressed through the early part of the European session and below a two-week high touched the previous day. Speculations that Japan’s financial authorities intervened again, for a second time this week, to prop up the domestic currency provided a strong boost to the JPY. The initial market reaction, however, fades rather quickly in the wake of expectations that the US-Japan rate differential will remain wide for some time. Apart from this, a generally positive risk tone is seen undermining the safe-haven JPY and acting as a tailwind for the USD/JPY pair. That said, the prevalent US Dollar (USD) selling, led by receding fears about further interest rate hikes by the Federal Reserve (Fed), keeps a lid on any meaningful appreciating move for the currency pair. Traders now look to the US macro data – Challenger Job Cuts, the usual Weekly Initial Jobless Claims and Trade Balance data for some impetus, though the focus will remain on the US Nonfarm Payrolls (NFP) on Friday.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 155.4452 | Negative Crossover | Bearish
  • MA 20 : 154.5489 | Positive Crossover | Bullish
  • MA 50 : 152.4422 | Positive Crossover | Bullish

Simple :

  • MA 10 : 155.6585 | Negative Crossover | Bearish
  • MA 20 : 154.4501 | Positive Crossover | Bullish
  • MA 50 : 151.8568 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 54.9913 | Buy Zone | Bullish

Stochastic   Oscillator : 39.2844 | Sell Zone | Negative

Resistance   And Support Levels :

  • R1 : 159.8323 R2 : 162.0514
  • S1 : 152.6484 S2 : 150.4293

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 154.64 | Take Profit : 157.86 | Stop Loss : 152.61

Elsewhere In The Forex Market

NZD/USD up 0.12% to 0.5937, The USD/CAD down 0.18% to 1.3713. The EUR/GBP down 0.03% at 0.8549. AUD/USD up 0.25% at 0.6539. AUD/NZD up 0.1% at 1.1012, The USD/CNY up 0.01% at 7.2406, AUD/SEK up 0.24% at 7.1452, at the time of writing.

Key Economic Events & Data Release Today:

(USD) FOMC Press Conference at 00:00. (EUR) German Manufacturing PMI (Apr) Forecast 42.2, Previous 41.9 at 13:25. (USD) Initial Jobless Claims Forecast 212K, Previous 207K at 18:00.