. Weekly Forex Analysis - USD/YEN and AUD/USD Bullish Signals Dominant

Weekly Forex Analysis – USD/YEN and AUD/USD Bullish Signals Dominant

Weekly Forex Analysis – USD/YEN and AUD/USD Bullish Signals Dominant

25 May 2024

Introduction

The Euro is poised for a breakout against the Dollar as the ECB is expected to cut rates while the Fed holds steady. Focus shifts to US inflation data and Fed speakers next week. The Pound also gained ground and could extend its rally. Meanwhile, the Dollar paused after hawkish Fed comments and the Yen weakened despite easing inflation. The Aussie Dollar dipped on risk aversion and falling commodity prices.

Markets In Focus Today – EUR/USD

EUR/USD Bulls gain confidence ahead of US PCE inflation.

The FOMC meeting Minutes showed officials will keep waiting before cutting interest rates. A rate cut from the European Central Bank in June is pretty much priced in. EUR/USD bullish case could gain momentum once it clears the 1.0900 price zone. The EUR/USD pair halted its recovery and finished the week with modest losses in the 1.0840 region, meeting sellers just ahead of the 1.0900 mark. The US Dollar pushed higher for most of the week but was unable to post substantial gains, given speculation the Federal Reserve (Fed) will delay rate cuts as much as it can. Fed speakers flooded the news wires throughout the week but had no impact on prices as they repeated well-known messages. However, the Federal Open Market Committee (FOMC) imprinted some life on markets on Wednesday with the release of the Minutes of the May Fed meeting. The upcoming week will provide investors with additional clues about economies’ health and future central banks’ actions. The focus will be on inflation as the US releases the April Personal Consumption Expenditures (PCE) Price Index, the Fed’s favorite inflation gauge.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0828 | Positive Crossover | Bullish
  • MA 20 : 1.0804 | Positive Crossover | Bullish
  • MA 50 : 1.0791 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.0842 | Positive Crossover | Bullish
  • MA 20 : 1.0791 | Positive Crossover | Bullish
  • MA 50 : 1.0775 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 58.3339 | Buy Zone | Bullish

Stochastic   Oscillator : 36.69 | Sell Zone | Positive

Resistance   And Support Levels :

  • R1 : 1.0826 R2 : 1.0893
  • S1 : 1.0609 S2 : 1.0542

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 1.0823 | Take Profit : 1.0892 | Stop Loss : 1.0787

GBP/USD

GBP/USD Pound Sterling posts second straight week of gains despite renewed US Dollar strength.

The Pound Sterling hit two-month highs above 1.2750 against the US Dollar. The GBP/USD uptrend is likely to stay intact in the holiday-shortened week ahead. The Pound Sterling eyes 1.2900 amid double bullish crossovers and RSI. The Pound Sterling (GBP) managed to eke out minor gains against the US Dollar (USD) this week after the GBP/USD pair touched the highest level in two months above 1.2750. Having started the week on the front foot, the Pound Sterling struggled to resist the US Dollar resurgence, but GBP/USD eventually posted mild gains, extending the previous week’s rebound. The hawkish sentiment surrounding the fading expectations of interest rate cuts by both the Bank of England (BoE) and the US Federal Reserve(Fed) emerged as the underlying theme this week, with resurgent US Dollar demand partly offsetting the optimism seen around the British Pound. Tuesday and Wednesday are quiet in terms of data releases from both sides of the Atlantic but Fed speakers are likely to dominate, with the US Dollar price action expected to drive the GBP/USD pair.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2674 | Positive Crossover | Bullish
  • MA 20 : 1.2626 | Positive Crossover | Bullish
  • MA 50 : 1.2600 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.2676 | Positive Crossover | Bullish
  • MA 20 : 1.2601 | Positive Crossover | Bullish
  • MA 50 : 1.2579 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 66.5783 | Buy Zone | Bullish

Stochastic   Oscillator : 32.06 | Sell Zone | Neutral

Resistance   And Support Levels :

  • R1 : 1.2657 R2 : 1.2754
  • S1 : 1.2345 S2 : 1.2248

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 1.2708 | Take Profit : 1.2791 | Stop Loss : 1.2664

USD/JPY

US Dollar broadly eased on Friday, but held close to flat against Yen.

Japanese National CPI inflation ticked lower in April. Risk appetite recovered after US consumer inflation outlook improved. USD/JPY churned on Friday, wrapping up close to where it started the day, just below the 157.00 handle, as investors looked to recover balance after a tense week. Broad hopes for a September rate cut from the Federal Reserve (Fed) were knocked back this week after rate markets repriced odds of at least a quarter-point cut in September to less than even. Rate markets were pricing in upwards of 70% odds of a 25-basis-point trim in September at the start of the week. Japan’s National Consumer Price Index (CPI) inflation eased to 2.5% YoY in April, but the Bank of Japan (BoJ) remains bitterly determined to hold interest rates at rock-bottom, near-negative levels until they see an expected downturn in inflation hold above 2%. The BoJ currently expects CPI inflation to slump below 2.0% through 2025 and some of 2026. Despite operations in global markets, the Yen continues to shed weight, and Yen-based pairs are grinding back towards record highs.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 156.2073 | Positive Crossover | Bullish
  • MA 20 : 155.6470 | Positive Crossover | Bullish
  • MA 50 : 153.9715 | Positive Crossover | Bullish

Simple :

  • MA 10 : 156.1323 | Positive Crossover | Bullish
  • MA 20 : 155.5594 | Positive Crossover | Bullish
  • MA 50 : 153.8781 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 61.2140 | Buy Zone | Bullish

Stochastic   Oscillator : 88.82 | Sell Zone | Neutral

Resistance   And Support Levels :

  • R1 : 159.8369 R2 : 162.0561
  • S1 : 152.6531 S2 : 150.4339

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 156.70 | Take Profit : 157.90 | Stop Loss : 155.97

AUD/USD

Australian Dollar edges lower amid stronger US Dollar, Consumer Sentiment eyed.

The Australian Dollar continues to lose ground after the higher-than-expected US PMI data. Australian equities faced pressure due to the lower commodity prices amid hawkish sentiment surrounding the Fed. The US Dollar gains ground as the Fed expects to maintain higher policy rates for longer. The Australian Dollar (AUD) continues its losing streak for the fourth successive session on Friday, possibly driven by risk aversion. The AUD/USD pair experiences downside as the US Dollar (USD) advances on hawkish sentiment surrounding the Federal Reserve (Fed) of maintaining higher policy rates for an extended period. The Australian Dollar came under pressure as the Consumer Inflation Expectation of future inflation over the next 12 months fell to 4.1% in May from 4.6% in April, marking the lowest level since October 2021. This has increased the risk of inflation remaining above the target for an extended period. The latest Reserve Bank of Australia (RBA) meeting minutes showed that the policymakers agreed that it was challenging to either rule in or rule out future changes in the cash rate.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6632 | Negative Crossover | Bearish
  • MA 20 : 0.6610 | Positive Crossover | Bullish
  • MA 50 : 0.6577 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.6647 | Negative Crossover | Bearish
  • MA 20 : 0.6611 | Positive Crossover | Bullish
  • MA 50 : 0.6554 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 54.2191 | Buy Zone | Bullish

Stochastic   Oscillator : 20.24 | Sell Zone | Positive

Resistance   And Support Levels :

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

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 0.6634 | Take Profit : 0.6707 | Stop Loss : 0.6592

Elsewhere In The Forex Market

NZD/USD up 0.36% to 0.6121. The USD/CAD down 0.49% to 1.3661. The USDCHF up 0.01% at 0.9144. EUR/GBP down 0.02% at 0.8514. The USD/CNY up 0.01% at 7.2420, AUD/SEK down 0.35% at 7.0706, CHF/SGD down 0.18% at 1.4758 at the time of writing.

Key Economic Events & Data Release Today:

(EUR) German Ifo Business Climate Index (May) (Monday) (CAD) Wholesale Sales (MoM) (Monday) (AUD) Retail Sales (MoM) (Apr) (Tuesday) (USD) CB Consumer Confidence (May) (Tuesday) (EUR) German CPI (MoM) (May) (Wednesday) (NZD) Annual Budget Release (Thursday) (CHF) GDP (QoQ) (Q1) (Thursday) (EUR) Unemployment Rate (Apr) (Thursday) (USD) GDP (QoQ) (Q1) (Thursday)