. Weekly Forex Analysis - Weak US NFP Data Boosts Speculation Of Fed Rate Cuts

Weekly Forex Analysis – Weak US NFP Data Boosta Speculation Of Fed Rate Cuts

Weekly Forex Analysis – Weak US NFP Data Boosta Speculation Of Fed Rate Cuts

04 May 2024

Introduction

EUR/USD surges as weak US NFP data fuels speculation of Fed rate cuts. With April’s Nonfarm Payroll report revealing a cooling labor market, the Federal Reserve’s dovish stance, though less than expected, buoyed markets. Despite three consecutive weeks of gains, EUR/USD faces tepid buying interest. Meanwhile, GBP/USD rebounds ahead of BoE meeting and UK GDP data, while USD/JPY bears gain momentum amid intervention rumors, eyeing 152.00. The Australian Dollar maintains its strength on hawkish RBA sentiments, with expectations of prolonged higher interest rates.

Markets In Focus Today – EUR/USD

EUR/USD rallies as weak US NFP boosts Fed rate-cut prospects.

The Nonfarm Payroll report showed that the labor market cooled in April.The Federal Reserve was less hawkish than anticipated, markets rallied on relief.EUR/USD is up for a third consecutive week but buying interest remains reluctant.The EUR/USD pair advanced for a third consecutive week, accumulating a measly 160 pips in that period. The pair trades around 1.0760 ahead of the close after tumultuous headlines failed to trigger a clear directional path.The Federal Reserve (Fed) had a monetary policy meeting, and as widely anticipated, policymakers held interest rates steady at the range between 5.25% and 5.5%. The decision was no surprise as inflation has shown signs of picking up in the first quarter of 2024, while growth slowed.Chairman Jerome Powell dropped some hawkish comments in the following press conference, but not as hawkish as feared. On the one hand, Powell noted interest rates are restrictive enough, dismissing the odds for a rate hike. The upcoming week will bring the final HCOB April Services and Composite PMIs for the EU. The EU will also release the March Producer Price Index (PPI) and Retail Sales for the same month, while the US most relevant figure will be the preliminary estimate of the May Michigan Consumer Sentiment Index.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0713 | Positive Crossover | Bullish
  • MA 20 : 1.0721 | Positive Crossover | Bullish
  • MA 50 : 1.0766 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.0705 | Positive Crossover | Bullish
  • MA 20 : 1.0704 | Positive Crossover | Bullish
  • MA 50 : 1.0795 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 53.5183 | Buy Zone | Bullish

Stochastic   Oscillator : 75.6663 | Buy Zone | Positive

Resistance   And Support Levels :

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

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 1.0739 | Take Profit : 1.0810 | Stop Loss : 1.0693

GBP/USD

GBP/USD Recovering ahead of BoE, UK GDP data.

The Pound Sterling reached a three-week top against the Greenback.GBP/USD closed its second consecutive week of gains.Investors’ attention now shifts to the BoE gathering and the preliminary UK GBP data for the first quarter.The British Pound (GBP) extended its march north against the US Dollar (USD) throughout the week, motivating GBP/USD to break above the 1.2600 figure for the first time since mid-April. Meanwhile, the Pound Sterling experienced continued buying pressure against the US Dollar following an auspicious start to the week. This renewed upside bias coincided with diminished demand for the US Dollar, which was exacerbated in response to the dovish tilt (or at least not as hawkish as expected) by the Federal Reserve (Fed) at its meeting on Wednesday as well as by Chairman Jerome Powell at his subsequent press conference. The upcoming week should be quite an interesting one for the quid, as the BoE meets on Thursday, and it is widely expected that the central bank will keep interest rate unchanged. Speculation among investors anticipates the first rate cut by the “Old Lady” in August or September, while another rate reduction appears fully priced in for December. On Friday, UK the Gross Domestic Product (GDP) release for the first quarter will also be on the traders’ radar, as it could show that the UK economy overcame the shallow recession it sank into during the second half of 2023.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2509 | Positive Crossover | Bullish
  • MA 20 : 1.2518 | Positive Crossover | Bullish
  • MA 50 : 1.2570 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.2491 | Positive Crossover | Bullish
  • MA 20 : 1.2495 | Positive Crossover | Bullish
  • MA 50 : 1.2612 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 51.2047 | Buy Zone | Bullish

Stochastic   Oscillator : 80.4514 | Buy Zone | Positive

Resistance   And Support Levels :

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

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 1.2521 | Take Profit : 1.2692 | Stop Loss : 1.2463

USD/JPY

USD/JPY Bears charge helped by intervention rumors, eye 152.00.

The USD/JPY dropped for the third straight day and accumulated losses of more than 3.40% in the week after a suspected intervention by the Bank of Japan (BoJ) on Monday. Since then, the pair formed a two-candlestick chart pattern, a ‘bearish harami’ which reassembles an inside day, confirmed by Wednesday’s price action. That said, on Friday, the pair fell 0.49% and traded at 152.93. Meanwhile, the DXY US Dollar Index – which gauges the value of the US Dollar (USD) against a basket of six foreign currencies – lost control of 105.00 for now as markets are stepping away in order not to get steamrolled by the Japanese interventions. Still, the recent depreciation of the Greenback could offer a window of opportunity for US Dollar buyers to step in and gear up for a profitable ride higher. The weaker US Nonfarm Payrolls print has in the meantime pushes USD/JPY below 152.00 and sees ample amount of US Dollar buyers coming in to buy the dip at these levels.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 154.7860 | Negative Crossover | Bearish
  • MA 20 : 154.2768 | Negative Crossover | Bearish
  • MA 50 : 152.4094 | Positive Crossover | Bullish

Simple :

  • MA 10 : 155.3568 | Negative Crossover | Bearish
  • MA 20 : 154.4469 | Negative Crossover | Bearish
  • MA 50 : 151.8783 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 46.1300 | Neutral Zone | Neutral

Stochastic   Oscillator : 15.0092 | Sell Zone | Negative

Resistance   And Support Levels :

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

Overall Sentiment : Neutral Market Direction : Sell

Trade Suggestion : Limit Sell : 153.74 | Take Profit : 151.80 | Stop Loss : 155.09

AUD/USD

Australian Dollar maintains ground amid subdued US Dollar.

The Australian Dollar rises on hawkish sentiment surrounding the RBA prolonging higher interest rates.Australia’s central bank is expected to maintain its current rate at 4.35% until the end of September.The Australian Dollar (AUD) continues its winning streak for the third successive session on Friday. The hawkish sentiment surrounding the Reserve Bank of Australia (RBA) bolsters the strength of the Aussie Dollar, consequently, underpinning the AUD/USD pair. Australia’s central bank is expected to maintain its key policy rate at 4.35% for a fourth consecutive meeting on Tuesday, and likely until the end of September, as per a Reuters poll of economists. These economists predict only one interest rate cut this year. The higher-than-expected domestic inflation data released last week has raised expectations that the RBA may delay interest rate cuts.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6532 | Positive Crossover | Bullish
  • MA 20 : 0.6519 | Positive Crossover | Bullish
  • MA 50 : 0.6529 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.6522 | Positive Crossover | Bullish
  • MA 20 : 0.6504 | Positive Crossover | Bullish
  • MA 50 : 0.6531 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 59.8811 | Buy Zone | Bullish

Stochastic   Oscillator : 82.8186 | Buy Zone | Positive

Resistance   And Support Levels :

  • R1 : 0.6602 R2 : 0.6669
  • S1 : 0.6387 S2 : 0.6320

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 0.6575 | Take Profit : 0.6644 | Stop Loss : 0.6538

Elsewhere In The Forex Market

NZD/USD up 0.81% to 0.6010. The USD/CAD up 0.08% to 1.3684. The USDCHF down 0.67% at 0.9045. EUR/GBP up 0.14% at 0.8568. The USD/CNY up 0.01% at 7.2396, AUD/SEK up 0.23% at 7.1491, CHF/SGD up 0.23% at 1.4912 at the time of writing.

Key Economic Events & Data Release Today:

(AUD) Retail Sales (MoM) (Mar) (Tuesday) (AUD) RBA Interest Rate Decision (May) (Tuesday) (AUD) RBA Rate Statement (Tuesday) (CAD) Ivey PMI (Apr) (Tuesday) (USD) Crude Oil Inventories (Wednesday) (GBP) BoE Interest Rate Decision (Apr) (Thursday) (GBP) BoE MPC Meeting Minutes (Thursday) (GBP) BoE Gov Bailey Speaks (Thursday) (USD) Initial Jobless Claims at (Thursday)