. Daily FX Analysis - UK job cuts, Euro firm, USD rules.

Daily FX Analysis – UK job cuts, Euro firm, USD rules.

Daily FX Analysis – UK job cuts, Euro firm, USD rules.

16 Apr 2024

Introduction

The Pound Sterling plunges to a five-month low following disappointing UK employment figures, with layoffs surging in February amidst concerns over heightened interest rates. As Middle East tensions escalate, risk-off sentiment pervades the market. Meanwhile, the Euro stabilizes against the Dollar ahead of key German data and Powell’s speech. In the US, robust Retail Sales propel the Dollar higher, while USD/CAD hits a YTD peak amid reduced Fed rate cut expectations and geopolitical risks. Similarly, NZD/USD struggles amid caution over Israel’s response to Iran, as investors seek refuge in the greenback amidst global uncertainties.

Markets In Focus Today – GBP/USD

Pound Sterling refreshes five month low after weak UK employment data.

The Pound Sterling declines further after the UK ONS reported weaker-than-expected labor market data.Employers laid off workers in February, exhibiting the negative impact of higher UK interest rates.The market sentiment remains risk-off amid fears of an escalation in Middle East tensions.The Pound Sterling (GBP) weakens in Tuesday’s London session after the United Kingdom Office for National Statistics (ONS) reported that labor market conditions have significantly cooled down in the three months ending February. The Unemployment Rate grew strongly to 4.2% and the overall labor market witnessed that 156K workers were laid-off. The labor market data demonstrates uncertainty over the economic outlook, which could force Bank of England (BoE) policymakers to start reducing interest rates earlier than previously expected. Job-seekers and current employees compromise with salary hikes when labor market conditions cool down, which results in slower wage growth that allows high inflation to return to its desired target sustainably.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2535 | Negative Crossover | Bearish
  • MA 20 : 1.2586 | Negative Crossover | Bearish
  • MA 50 : 1.2630 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.2567 | Negative Crossover | Bearish
  • MA 20 : 1.2600 | Negative Crossover | Bearish
  • MA 50 : 1.2649 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 31.8188 | Sell Zone | Bearish

Stochastic   Oscillator : 7.9645 | Sell Zone | Neutral

Resistance   And Support Levels :

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

Overall Sentiment : Bearish Market Direction : Sell

Trade Suggestion : Limit Sell : 1.2462 | Take Profit : 1.2400 | Stop Loss : 1.2506

EUR/USD

EUR/USD steadies above 1.0600, awaits German ZEW and Powell speech.

EUR/USD is holding above 1.0600 in the European morning on Tuesday, having hit fresh five-month lows. The pair draws support from sluggish US Treasury bond yields but the rebound appears capped amid a stronger US Dollar and risk-aversion. Germany’s ZEW survey and Powell awaited. Easing geopolitical tensions limited the US Dollar’s (USD) upside in the first half of the day on Monday and helped EUR/USD edge higher. After the data from the US showed that Retail Sales increased at a stronger pace than expected in March, however, US Treasury bond yields shot higher and allowed the USD to regather its strength. Housing Starts and Building Permits data for March will be featured in the US economic docket on Tuesday.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0721 | Negative Crossover | Bearish
  • MA 20 : 1.0768 | Negative Crossover | Bearish
  • MA 50 : 1.0812 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.0757 | Negative Crossover | Bearish
  • MA 20 : 1.0787 | Negative Crossover | Bearish
  • MA 50 : 1.0817 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 28.4874 | Sell Zone | Bearish

Stochastic   Oscillator : 4.4768 | Sell Zone | Neutral

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 : 1.0652 | Take Profit : 1.0587 | Stop Loss : 1.0700

USD/CAD

USD/CAD stands tall near 1.3800, highest since November as traders look to Canadian CPI.

USD/CAD attracts some buyers for the third straight day and climbs to a fresh YTD peak.Reduced Fed rate cut bets, along with geopolitical risks, benefit the USD and lend support.An uptick in Oil prices underpins the Loonie and keeps a lid on further gains for the major.The USD/CAD pair builds on last week’s breakout momentum through the 1.3600-1.3610 supply zone and gains some positive traction for the fifth successive day on Tuesday. Spot prices climb to the 1.3815 region, or the highest level since November 14 during the Asian session and remain well supported by the underlying strong bullish sentiment surrounding the US Dollar (USD). The USD Index (DXY), which tracks the Greenback against a basket of currencies, climbs to over a five-month top in the wake of expectations that the Federal Reserve (Fed) will delay cutting interest rates amid sticky inflation.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.3686 | Positive Crossover | Bullish
  • MA 20 : 1.3629 | Positive Crossover | Bullish
  • MA 50 : 1.3565 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.3652 | Positive Crossover | Bullish
  • MA 20 : 1.3605 | Positive Crossover | Bullish
  • MA 50 : 1.3548 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 74.2669 | Buy Zone | Bullish

Stochastic   Oscillator : 95.9412 | Buy Zone | Neutral

Resistance   And Support Levels :

  • R1 : 1.3598 R2 : 1.3644
  • S1 : 1.3450 S2 : 1.3404

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 1.3754 | Take Profit : 1.3842 | Stop Loss : 1.3703

NZD/USD

NZD/USD depreciates amid risk aversion due to geopolitical tensions, trades below 0.5900.

NZD/USD extends its losing streak as traders adopt cautious stance amid anticipation of Israel’s response to Iran’s assault.US Retail Sales (MoM) rose by 0.7% in March, against the expected 0.3% and 0.9% prior.US Dollar extends gains on amplified expectations of the Fed maintaining higher policy rates for an extended period.NZD/USD depreciates to near 0.5880 during the Asian trading session on Tuesday, as investors turn toward the US Dollar (USD) seeking refuge amid escalated geopolitical tensions in the Middle East. Traders await Israel’s response to Iran’s airstrike over the weekend. Additionally, traders are awaiting New Zealand’s Consumer Price Index (CPI) data for the first quarter of 2024, scheduled for release on Wednesday. Market expectations suggest a slight uptick to 0.6% quarter-on-quarter, compared to the previous period’s 0.5%.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.5962 | Negative Crossover | Bearish
  • MA 20 : 0.5995 | Negative Crossover | Bearish
  • MA 50 : 0.6050 | Negative Crossover | Bearish

Simple :

  • MA 10 : 0.5983 | Negative Crossover | Bearish
  • MA 20 : 0.5990 | Negative Crossover | Bearish
  • MA 50 : 0.6072 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 32.8438 | Sell Zone | Bearish

Stochastic   Oscillator : 3.6106 | Sell Zone | Neutral

Resistance   And Support Levels :

  • R1 : 0.6149 R2 : 0.6211
  • S1 : 0.5951 S2 : 0.5890

Overall Sentiment : Bearish Market Direction : Sell

Trade Suggestion : Limit Sell : 0.5894 | Take Profit : 0.5871 | Stop Loss : 0.5911

Elsewhere In The Forex Market

USD/JPY up 0.09% to 154.39, The AUD/USD down 0.35% to 0.6418. The EUR/GBP up 0.03% at 0.8538. USD/CHF up 0.08% at 0.9122. AUD/NZD down 0.14% at 1.0898, The USD/CNY up 0.02% at 7.2381, AUD/SEK down 0.08% at 7.0196, at the time of writing.

Key Economic Events & Data Release Today:

(CNY) GDP (YoY) (Q1) Forecast –4.8%, Previous –5.2% at 07:30. (CNY) Industrial Production (YoY) (Mar) Forecast 6.0%, Previous 7.0% at 07:30 (GBP) Average Earnings Index+Bonus (Feb) Forecast 5.5%, Previous 5.6% at 11:30. (USD) Building Permits (Mar) Forecast 1.514M, Previous 1.524M at 18:00. (CAD) Core CPI (MoM) (Mar) Previous 0.1% at 18:00. (GBP) BoE Gov Bailey Speaks at 22:30. (USD) Fed Chair Powell Speaks at 22:45.