. Daily FX Analysis - USD strength, geopolitics dominate.

Daily FX Analysis – USD strength, geopolitics dominate.

Daily FX Analysis – USD strength, geopolitics dominate.

19 Apr 2024

Introduction

GBP/USD remains subdued below 1.2450 ahead of the UK Retail Sales data release. With the pair hovering near 1.2430 in early Asian trading on Friday, the US Dollar’s strength, fueled by positive economic data and hawkish Federal Reserve comments, weighs on Sterling. Expectations of delayed rate cuts by the Fed until September are reinforced by remarks from Fed officials. Meanwhile, EUR/USD retreats below 1.0650 on similar Fed sentiments, and USD/JPY faces pressure amid Middle East tensions despite robust US economic data.

Markets In Focus Today – GBP/USD

GBP/USD remains on the defensive below 1.2450 ahead of UK Retail Sales data.

The GBP/USD pair remains on the defensive near 1.2430 during the early Asian session on Friday. The downtick of the major pair is backed by the stronger US Dollar (USD) as the strong US economic data and hawkish remarks from the Federal Reserve (Fed) officials have triggered the speculation that the US central bank will delay interest rate cuts to September. On Thursday, Atlanta Fed President Raphael Bostic said that US inflation is too high and the central bank still has a way to go on inflation. Bostic further stated that he’s comfortable being patient and rate cuts are likely by year end. New York Fed President John Williams emphasized that the Fed is data-dependent and noted that he doesn’t feel an urgency to cut rates. Investors are now pricing in nearly 66% odds that the Fed will cut its rate in September, according to the CME FedWatch Tool.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2488 | Negative Crossover | Bearish
  • MA 20 : 1.2546 | Negative Crossover | Bearish
  • MA 50 : 1.2607 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.2504 | Negative Crossover | Bearish
  • MA 20 : 1.2562 | Negative Crossover | Bearish
  • MA 50 : 1.2638 | Negative Crossover | Bearish

RSI (Relative Strength Index): 32.0075 | Sell Zone | Bearish

Stochastic   Oscillator : 11.1967 | Sell Zone | Negative

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: 1.2446 | Take Profit: 1.2364 | Stop Loss: 1.2512

EUR/USD

EUR/USD extends its downside below 1.0650 on hawkish Fed remarks.

The EUR/USD pair extends its downside around 1.0640 after retreating from weekly peaks of 1.0690 on Friday during the early Asian session. The hawkish comments from Federal Reserve (Fed) officials provide some support to the US Dollar (USD). Later in the day, Chicago Fed Austan Goolsbee is set to speak. On Thursday, the number of US citizens who filed new claims for unemployment benefits rose by 212K for the week ending April 13 from the previous weekly gain of 212K (revised from 211K). This figure came in below the market consensus of 215K, according to the US Department of Labor. The report indicated that the labor market remains resilient and investors expect that the US Fed might delay cutting interest rates until September.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0687 | Negative Crossover | Bearish
  • MA 20 : 1.0737 | Negative Crossover | Bearish
  • MA 50 : 1.0793 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.0701 | Negative Crossover | Bearish
  • MA 20 : 1.0755 | Negative Crossover | Bearish
  • MA 50 : 1.0809 | Negative Crossover | Bearish

RSI (Relative Strength Index): 33.7343 | Sell Zone | Bearish

Stochastic   Oscillator : 16.6725 | Sell 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: 1.0662 | Take Profit: 1.0587 | Stop Loss: 1.0718

AUD/USD

Australian Dollar recovers losses amid stronger US Dollar, awaits Fedspeak.

The Australian Dollar (AUD) remains in the negative territory after paring losses on Friday. The AUD/USD pair dropped as riskier assets faced pressure due to heightened risk aversion across financial markets. This sentiment intensified following confirmation from ABC News that Israeli missiles had struck a site in Iran, exacerbating tensions in the Middle East. The Australian Dollar (AUD) faces challenges alongside a decline in the ASX 200 Index on Friday, nearing its two-month low of 7,489. This trend was influenced by weak cues from Wall Street overnight. Additionally, Australia’s 10-year government bond yield fell below 4.3%, retracting from over four-month highs, as investors anticipated a dovish outlook from the Reserve Bank of Australia (RBA) regarding monetary policy.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6461 | Negative Crossover | Bearish
  • MA 20 : 0.6495 | Negative Crossover | Bearish
  • MA 50 : 0.6530 | Negative Crossover | Bearish

Simple :

  • MA 10 : 0.6483 | Negative Crossover | Bearish
  • MA 20 : 0.6510 | Negative Crossover | Bearish
  • MA 50 : 0.6532 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 36.0568 | Sell Zone | Bearish

Stochastic   Oscillator : 14.0200 | Sell Zone | Negative

Resistance   And Support Levels :

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

Overall Sentiment: Bearish Market Direction: Sell

Trade Suggestion : Limit Sell: 0.6432 | Take Profit : 0.6366 | Stop Loss : 0.6483

USD/JPY

USD/JPY drops below 154.20 amid Middle East war fears.

The USD/JPY pair attracts some sellers at around 154.15 on Friday during the early Asian trading hours. The risk-off mood and rising tension between Israel and Iran boost the safe-haven flows, benefiting the Japanese Yen (JPY). However, the robust US economic data and any hawkish comments from the Federal Reserve (Fed) officials might cap the pair upside in the near term. The Bank of Japan (BoJ) will hold a meeting next week and it is expected to revise its inflation forecast for this fiscal year in a quarterly report. Japan’s inflation rate slowed in March, but remains above the central bank’s 2% target, the Statistics Bureau of Japan reported on Friday. The year-on-year headline Consumer Price Index (CPI) for March climbed 2.7% YoY, followed by a 2.8% February increase. The Core CPI inflation, which excludes fresh food, rose 2.6% YoY in March from an increase of 2.8% in February, below the market consensus of 2.7%.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 153.6077 | Positive Crossover | Bullish
  • MA 20 : 152.6711 | Positive Crossover | Bullish
  • MA 50 : 150.9746 | Positive Crossover | Bullish

Simple :

  • MA 10 : 153.5049 | Positive Crossover | Bullish
  • MA 20 : 152.4821 | Positive Crossover | Bullish
  • MA 50 : 150.8414 | Positive Crossover | Bullish

RSI (Relative Strength Index): 71.2748 | Buy Zone | Bullish

Stochastic   Oscillator : 90.0101 | 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: 153.51 | Take Profit: 154.76 | Stop Loss: 152.66

Elsewhere In The Forex Market

USD/CHF was down 0.47% to 0.9081, and The NZD/USD was down 0.4% to 0.5878. The EUR/GBP up 0.14% at 0.8569. USD/CAD is up 0.14% at 1.3787. AUD/NZD is up 0.01% at 1.0880, The USD/CNY is up 0.04% at 7.2407, and AUD/SEK is down 0.09% at 7.0369, at the time of writing.

Key Economic Events & Data Release Today:

(GBP) Retail Sales (MoM) (Mar) Forecast –0.3%, Previous –0.0% at 11:30. (GBP) Core Retail Sales (MoM) (Mar) Previous 0.2% at 11:30