. Weekly Forex Analysis - ECB Rate Cut & US Jobs Data Set Tone for Volatile Week

Weekly Forex Analysis – ECB Rate Cut & US Jobs Data Set Tone for Volatile Week

Weekly Forex Analysis – ECB Rate Cut & US Jobs Data Set Tone for Volatile Week

01 Jun 2024

Introduction

The upcoming week promises volatility for major currency pairs as the ECB considers a rate cut and the U.S. releases key employment data. EUR/USD hovers near 1.0900, while GBP/USD eyes 1.2800 amidst Nonfarm Payrolls anticipation. USD/JPY remains driven by USD strength, and AUD/USD shows volatility ahead of potential RBA rate cut adjustments.

Markets In Focus Today – EUR/USD

EUR/USD Looming ECB rate cut, US employment data hint at volatile week.

The European Central Bank will meet on Thursday, and rate cuts are priced in. The focus in the United States will be on employment data ahead of the Nonfarm Payrolls report. The EUR/USD pair’s long-term perspective turned neutral after spending three weeks below 1.0900. The EUR/USD pair spent most of the week within familiar levels, partially due to the lack of relevant macroeconomic data throughout the first half of the week and partly amid comments from different Federal Reserve (Fed) officials. American policymakers kept putting efforts into cooling down hopes for interest rate cuts, keeping markets in risk-averse mode. Across the pond, European Central Bank (ECB) representatives maintained their willingness to trim interest rates in June, but warned a July cut is far from granted. But financial markets got some interesting clues beyond central banks’ well-known messages. The focus was on inflation-related figures, which helped EUR/USD to near the 1.0900 threshold by the end of the week.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0834 | Positive Crossover | Bullish
  • MA 20 : 1.0817 | Positive Crossover | Bullish
  • MA 50 : 1.0799 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.0839 | Positive Crossover | Bullish
  • MA 20 : 1.0822 | Positive Crossover | Bullish
  • MA 50 : 1.0772 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 56.1194 | Buy Zone | Bullish

Stochastic   Oscillator : 60.78 | Buy 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 : 1.0814 | Take Profit : 1.0888 | Stop Loss : 1.0770

GBP/USD

GBP/USD Pound Sterling eyes acceptance above 1.2800 in US NFP week.

The Pound Sterling tested 1.2800 against the US Dollar but failed to resist at higher levels. GBP/USD buyers hold the reins marching into the US Nonfarm Payrolls week. The Pound Sterling needs acceptance above 1.2800 to sustain the bullish momentum. The Pound Sterling (GBP) tested 1.2800 against the US Dollar (USD) this week, as the GBP/USD pair hit a new two-month high before sellers jumped back into the game. GBP/USD set off the week on a bullish note, extending the previous week’s rebound amid US and UK market holidays on Monday. Thin trading helped the pair stay afloat as the Pound Sterling continued to capitalize on the hot UK inflation data, which revived expectations about a delay in the Bank of England’s (BoE) policy pivot. Meanwhile, the US Dollar lost ground on a positive shift in risk sentiment from Friday.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2714 | Positive Crossover | Bullish
  • MA 20 : 1.2671 | Positive Crossover | Bullish
  • MA 50 : 1.2626 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.2727 | Positive Crossover | Bullish
  • MA 20 : 1.2654 | Positive Crossover | Bullish
  • MA 50 : 1.2584 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 62.2712 | Buy Zone | Bullish

Stochastic   Oscillator : 73.9204 | Buy Zone | Positive

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 : 1.2795 | Stop Loss : 1.2664

USD/JPY

USD/JPY is likely to remain underpinned by lack of options in Japan.

USD/JPY is likely to remain underpinned as the Bank of Japan has few options for sustainably strengthening the Yen. Direct intervention is only a quick fix and needs support from higher interest rates to work sustainably. The pair is likely to be a Dollar-affair with any declines resulting more from USD weakness rather than JPY strength. USD/JPY is likely to be a one-sided marriage with the US Dollar (USD) dominating the partnership, according to analysts. Any declines are likely to result from USD weakness rather than JPY strength The Japanese authorities are being forced to take drastic measures to prop up their currency due to concerns about the negative impact of a too-weak Yen on Japanese businesses. The little strength the Yen has mustered in April and May has been due to direct intervention in the FX markets by the Bank of Japan (BoJ).

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 156.7985 | Positive Crossover | Bullish
  • MA 20 : 156.2311 | Positive Crossover | Bullish
  • MA 50 : 154.5427 | Positive Crossover | Bullish

Simple :

  • MA 10 : 156.8554 | Positive Crossover | Bullish
  • MA 20 : 156.0999 | Positive Crossover | Bullish
  • MA 50 : 154.5079 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 60.4461 | Buy Zone | Bullish

Stochastic   Oscillator : 87.8906 | Buy Zone | Positive

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 : 156.74 | Take Profit : 158.00 | Stop Loss : 156.04

AUD/USD

AUD/USD Volatility contracts amid Descending Triangle formation.

AUD/USD jumps to near 0.6650 ahead of US core PCE Inflation data. The US Dollar weakens as a downwardly revised Q1 GDP keeps hopes of the Fed cutting rates at least once this year on the table. Australia’s hot CPI report for April pushes back RBA’s rate-cut prospects. AUD/USD is unfolding an up leg within a range which is approaching the range highs. If it reaches the highs the pair could reverse and begin a move south, extending the sideways trend. A clear breakout above the range highs or lows would be required to give the pair directionality again. The pair has probably entered a sideways trend and since “the trend is your friend” this range-bound market mode is likely to extend.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6636 | Positive Crossover | Bullish
  • MA 20 : 0.6622 | Positive Crossover | Bullish
  • MA 50 : 0.6588 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.6638 | Positive Crossover | Bullish
  • MA 20 : 0.6634 | Positive Crossover | Bullish
  • MA 50 : 0.6562 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 56.3450 | Buy Zone | Bullish

Stochastic   Oscillator : 38.7361 | 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 : 0.6641 | Take Profit : 0.6713 | Stop Loss : 0.6600

Elsewhere In The Forex Market

NZD/USD up 0.47% to 0.6143. The USD/CAD down 0.39% to 1.3627. The USDCHF down 0.14% at 0.9020. EUR/GBP up 0.02% at 0.8509. The USD/CNY up 0.13% at 7.2410, AUD/SEK down 0.28% at 7.0058, CHF/SGD up 0.2% at 1.4975 at the time of writing.

Key Economic Events & Data Release Today:

(CNY) Caixin Manufacturing PMI (May) (Monday) (EUR) German Manufacturing PMI (May) (Monday) (USD) Manufacturing PMI (May) (Monday) (USD) ISM Manufacturing PMI (May) (Monday) (AUD) Retail Sales (MoM) (Tuesday) (EUR) German Unemployment Change (Tuesday) (AUD) GDP (QoQ) (Q1) (Wednesday) (USD) ADP Nonfarm Unemployment Change (May) (Wednesday) (CAD) BoC Interest Rate Decision (Wednesday) (CAD) BoC Press Conference (Wednesday) (GBP) Construction PMI (May) (Thursday) (EUR) Retail Sales (MoM) (Thursday)