. Daily FX Analysis - Pound Drops, Euro Decline, Pound Rises.

Daily FX Analysis – Pound Drops, Euro Decline, Pound Rises.

Daily FX Analysis – Pound Drops, Euro Decline, Pound Rises.

01 May 2024

Introduction

Amid caution preceding the Federal Reserve’s policy decision, Pound Sterling (GBP) faces pressure, dipping below the key support of 1.2500 against the US Dollar (USD). With light economic activity in the UK, GBP/USD volatility stems from US Dollar movements as the US braces for data-heavy sessions, starting with the Fed decision. Expectations for Bank of England (BoE) rate cuts in June or August weigh on the Pound, while USD strengthens following hawkish Fed signals. EUR/USD dips near 1.0650 ahead of Fed policy, while USD/CHF holds above 0.9100 on similar sentiments.

Markets In Focus Today – GBP/USD

Pound Sterling comes under pressure amid caution ahead of Fed policy decision.

The Pound Sterling (GBP) extends its downside below the psychological support of 1.2500 against the US Dollar (USD) during Wednesday’s London session. Due to the light economic calendar in the United Kingdom, the volatility in the GBP/USD pair all comes from the side of the US Dollar as the United States faces a data-packed week, starting with the Federal Reserve decision (Fed) later on Wednesday. The Pound Sterling’s valuation will solely be impacted by expectations for interest-rate cuts by the Bank of England (BoE). Financial markets speculate that the BoE could opt to cut borrowing costs in the June or August meetings. Traders have priced in rate cuts soon as BoE Governor Andrew Bailey said he is confident that headline inflation will come down to 2% in April. In March, UK inflation stood at 3.2%. Investors expect that the Fed will emphasize the need to maintain the current interest rate framework for longer.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2490 | Positive Crossover | Bullish
  • MA 20 : 1.2511 | Negative Crossover | Bearish
  • MA 50 : 1.2571 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.2462 | Positive Crossover | Bullish
  • MA 20 : 1.2505 | Negative Crossover | Bearish
  • MA 50 : 1.2616 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 46.7724 | Neutral Zone | Neutral

Stochastic   Oscillator : 9.03 | Sell Zone | Negative

Resistance   And Support Levels :

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

Overall Sentiment : Bearish Market Direction : Sell

Trade Suggestion : Stop Sell : 1.2474 | Take Profit : 1.2376 | Stop Loss : 1.2554

EUR/USD

EUR/USD drops to near 1.0650 ahead of Fed policy.

EUR/USD continues its decline for the second consecutive day, hovering around 1.0650 during Asian trading hours on Wednesday. With European markets largely closed for Labour Day, investors are expecting the Federal Reserve’s (Fed) latest policy decision. The US Dollar Index (DXY), which gauges the performance of the US Dollar (USD) against six major currencies, continues its rally following higher than expected Employment Cost Index data released on Tuesday. Additionally, hawkish remarks from Fed officials, signaling no immediate need for rate cuts, undermined the EUR/USD pair. Traders are anticipated to closely monitor the release of the ADP Employment Change and ISM Manufacturing PMI from the United States (US) on Wednesday, preceding the Fed’s Monetary Policy Statement.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0690 | Negative Crossover | Bearish
  • MA 20 : 1.0712 | Negative Crossover | Bearish
  • MA 50 : 1.0766 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.0682 | Negative Crossover | Bearish
  • MA 20 : 1.0712 | Negative Crossover | Bearish
  • MA 50 : 1.0797 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 42.0445 | Neutral Zone | Neutral

Stochastic   Oscillator : 44.6181 | Sell Zone | Negative

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 : 1.0684 | Take Profit : 1.0614 | Stop Loss : 1.0737

USD/CHF

USD/CHF remains above 0.9100, eyes on Fed’s policy decision.

USD/CHF retraces its recent losses registered on Monday, trading around 0.9130 during the European session on Tuesday. The US Dollar (USD) appreciates, possibly due to hawkish remarks from US Federal Reserve (Fed) officials, indicating no immediate need for rate cuts. This has underpinned the USD/CHF pair. According to a report by The Economic Times on Monday, Fed Chair Jerome Powell said that it may take “longer than expected” to gain confidence that inflation is progressing toward the central bank’s 2% target. Powell also emphasized that the central bank can maintain high rates “as long as needed.” Additionally, Fed Governor Michelle Bowman expressed concerns about “upside risks” to inflation. Meanwhile, Minneapolis Fed President Neel Kashkari floated the possibility of no rate cuts occurring this year. The Swiss KOF Leading Indicator indicated robust development in the domestic economy.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.9142 | Positive Crossover | Bullish
  • MA 20 : 0.9104 | Positive Crossover | Bullish
  • MA 50 : 0.8998 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.9135 | Positive Crossover | Bullish
  • MA 20 : 0.9109 | Positive Crossover | Bullish
  • MA 50 : 0.8973 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 67.5240 | Buy Zone | Bullish

Stochastic   Oscillator : 84.0706 | Buy Zone | Positive

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 : 0.9157 | Take Profit : 0.9242 | Stop Loss : 0.9103

AUD/USD

Australian Dollar gains ground ahead of Fed interest rate decision.

The Australian Dollar (AUD) has rebounded due to possible risk-on sentiment. However, the AUD/USD pair faced pressure during the early trading hours on Wednesday following the release of the AiG Industry Index. The data indicated a prevailing contraction in private business activity in Australia during March. With the Reserve Bank of Australia’s (RBA) meeting scheduled for next week, it is widely anticipated to maintain interest rates at the current level of 4.35%. The Australian Dollar lost ground after lower-than-expected Aussie Retail Sales data released on Tuesday, potentially affecting the RBA’s hawkish stance on interest rates. However, higher-than-expected domestic inflation data released last week has raised expectations that the central bank may delay interest rate cuts. Traders are expected to observe the release of the ADP Employment Change and ISM Manufacturing PMI from the United States (US) on Wednesday, ahead of the Fed’s Monetary Policy Statement. 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 : 0.6495 | Negative Crossover | Bearish
  • MA 20 : 0.6500 | Negative Crossover | Bearish
  • MA 50 : 0.6523 | Negative Crossover | Bearish

Simple :

  • MA 10 : 0.6484 | Negative Crossover | Bearish
  • MA 20 : 0.6501 | Negative Crossover | Bearish
  • MA 50 : 0.6529 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 46.7812 | Neutral Zone | Neutral

Stochastic   Oscillator : 2.77 | Sell Zone | Negative

Resistance   And Support Levels :

  • R1 : 0.6602 R2 : 0.6668
  • S1 : 0.6386 S2 : 0.6320

Overall Sentiment : Bearish Market Direction : Sell

Trade Suggestion : Limit Sell : 0.6488 | Take Profit : 0.6441 | Stop Loss : 0.6519

Elsewhere In The Forex Market

NZD/USD up 0.07% to 0.5891, The USD/JPY up 0.08% to 157.91. The EUR/GBP up 0.02% at 0.8539. USD/CAD down 0.03% at 1.3774. AUD/NZD up 0.12% at 1.1000, The USD/CNY up 0.01% at 7.2396, AUD/SEK down 0.06% at 7.1325, at the time of writing.

Key Economic Events & Data Release Today:

(NZD) Employment Change (QoQ) (Q1) Forecast 0.3%, Previous 0.4% at 04:14. (NZD) RBNZ Gov Orr Speaks at 04:30. (GBP) Manufacturing PMI (Apr) Forecast 48.7%, Previous 50.3% at 14:00. (USD) ADP Nonfarm Employment Change (Apr) Forecast 179K, Previous 184K at 17:45. (USD) ISM Manufacturing PMI (Apr) Forecast 50.0, Previous 50.3 at 19:30. (USD) JoLTs Job Openings (Mar) Forecast 8.680M, Previous 8.756M at 19:30. (USD) FOMC Statement at 23:30.