. Weekly FX Analysis - Explore central bank impacts on currencies.

Weekly FX Analysis – Explore central bank impacts on currencies.

Weekly FX Analysis – Explore central bank impacts on currencies.

27 Apr 2024

Introduction

GBP/USD plunges below 1.2500 as bearish sentiment overrides bullish hopes. Expectations of interest rate cuts from the Bank of England (BoE) prompt selling pressure, despite an improved UK economic outlook. Meanwhile, EUR/USD grapples with a risk-averse atmosphere, with next week’s focus on Federal Reserve and Nonfarm Payrolls data. The Japanese Yen weakened further after the Bank of Japan’s policy decision, while AUD/USD extended its rally post-US core PCE data.

Markets In Focus Today – GBP/USD

GBP/USD Tumbles below 1.2500 as bears cut bulls hopes short.

In Friday’s early American session, the Pound Sterling (GBP) faces selling pressure near 1.2500 against the US Dollar (USD). The GBP/USD pair drops as firm expectations that the Bank of England (BoE) will start reducing interest rates from the June meeting. BoE policymakers see inflation receding sharply in upcoming months but still refrain from providing a concrete time frame for interest-rate cuts. In the press conference after the last monetary policy meeting, BoE Governor Andrew Bailey said market expectations for two or three rate cuts this year are not “unreasonable”. Meanwhile, the United Kingdom’s economic outlook has improved even though the Bank of England (BoE) is maintaining interest rates higher. The preliminary PMI report from S&P Global/CIPS for April, released on Tuesday, showed that activity in the services sector remains robust, pushing overall activity higher despite a lagging Manufacturing PMI. The data also showed that new business inflows in the service sector remain strong.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2471 | Positive Crossover | Bullish
  • MA 20 : 1.2509 | Negative Crossover | Bearish
  • MA 50 : 1.2578 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.2439 | Positive Crossover | Bullish
  • MA 20 : 1.2516 | Negative Crossover | Bearish
  • MA 50 : 1.2622 | Negative Crossover | Bearish

RSI (Relative Strength Index): 45.8192 | Neutral Zone | Neutral

Stochastic   Oscillator : 46.1288 | Neutral 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 : Stop Sell : 1.2476 | Take Profit : 1.2365 | Stop Loss : 1.2569

EUR/USD

EUR/USD Federal Reserve and Nonfarm Payrolls spell action next week.

United States inflation and growth-related figures spurred speculation the Fed will remain on hold for longer. European policymakers continue to pave the way towards a June rate cut.EUR/USD battles to regain the upside in a risk-averse environment. The EUR/USD pair temporarily reconquered the 1.0700 threshold this week, settling at around that round level. The US Dollar lost its appeal following discouraging United States (US) macroeconomic data indicating tepid growth and persistent inflationary pressures. The data became more relevant ahead of the Federal Reserve (Fed) monetary policy decision next week, exacerbated by the blackout period that prevents Fed officials from making comments on the matter ten days before the event. The US Fed will announce its monetary policy decision on May 1st, and market participants believe Chair Jerome Powell & Co. will maintain the hawkish bias, downplaying rate-cut speculation.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0695 | Negative Crossover | Bearish
  • MA 20 : 1.0722 | Negative Crossover | Bearish
  • MA 50 : 1.0776 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.0668 | Positive Crossover | Bullish
  • MA 20 : 1.0726 | Negative Crossover | Bearish
  • MA 50 : 1.0804 | Negative Crossover | Bearish

RSI (Relative Strength Index): 43.6359 | Neutral Zone | Neutral

Stochastic   Oscillator : 36.7031 | 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: Stop Sell: 1.0680 | Take Profit: 1.0598 | Stop Loss: 1.0746

USD/JPY

Japanese Yen trades just shy of 157.00 versus the USD.

The Japanese Yen weakened across the board after BoJ announced its policy decision. A shortlived spike in the Yen may be a testament to an attempt by the Japanese authorities to intervene. The Japanese Yen (JPY) plummeted to a fresh multi-decade low of 156.99 against its American counterpart on Friday, after the Bank of Japan (BoJ) decided to leave policy settings unchanged and US data continued to show rising inflation in the US. The Yen failed to gain any respite from BoJ Governor Kazuo Ueda’s remarks during the post-meeting press conference. Despite what looks like an intervention attempt on Friday morning the JPY only temporarily recovered and a heavy selling bias remains. The BoJ’s uncertain rate outlook, signs that inflation in Japan is cooling, and a generally positive tone around the equity markets turn out to be key factors undermining the safe-haven JPY.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 155.1867 | Positive Crossover | Bullish
  • MA 20 : 153.9605 | Positive Crossover | Bullish
  • MA 50 : 151.8599 | Positive Crossover | Bullish

Simple :

  • MA 10 : 155.1070 | Positive Crossover | Bullish
  • MA 20 : 153.5897 | Positive Crossover | Bullish
  • MA 50 : 151.4067 | Positive Crossover | Bullish

RSI (Relative Strength Index): 88.0229 | Buy Zone | Bullish

Stochastic   Oscillator : 96.9258 | Buy Zone | Neutral

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: 155.69 | Take Profit: 158.16 | Stop Loss: 154.09

AUD/USD

AUD/USD continues rising after US core PCE beats estimates with fifth up-day in a row.

AUD/USD extends rally after US core PCE beats estimates The lack of a reaction may be as a result of the US Dollar already pricing in inflationary GDP data on Thursday. Higher Australian factory gate inflation data overnight added a tailwind to AUD/USD. AUD/USD trades in the 0.6540s as it continues rallying after the release of US core Personal Consumption Expenditures Price (PCE) Index data for March. Despite the data showing a higher-than-expected rate of inflation, the US Dollar (USD) shows little reaction in most pairs, including AUD/USD, which looks like it will clock up its fifth daily gain in a row assuming a bullish close on Friday. Australian factory price inflation data out overnight, however, gave fresh impetus to the pair, after it showed a rise of 4.3% YoY in Q1 from 4.1% in the previous quarter.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6490 | Positive Crossover | Bullish
  • MA 20 : 0.6498 | Positive Crossover | Bullish
  • MA 50 : 0.6525 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.6460 | Positive Crossover | Bullish
  • MA 20 : 0.6503 | Positive Crossover | Bullish
  • MA 50 : 0.6532 | Positive Crossover | Bullish

RSI (Relative Strength Index): 53.6912 | Buy Zone | Bullish

Stochastic   Oscillator : 54.4090 | Buy Zone | Positive

Resistance   And Support Levels :

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

Overall Sentiment: Bullish Market Direction: Buy

Trade Suggestion: Stop Buy: 0.6551 | Take Profit: 0.6627 | Stop Loss: 0.6507

Elsewhere In The Forex Market

NZD/USD down 0.15% to 0.5939. The USD/CAD is up 0.07% to 1.3667. The USDCHF is up 0.2% at 0.9139. EUR/GBP down 0.29% at 0.8549. The USD/CNY is up 0.01% at 7.2359, AUD/SEK is up 0.8% at 7.1516, and CHF/SGD is up 0.01% at 1.4900 at the time of writing.

Key Economic Events & Data Release Today:

(EUR) German CPI (MoM) (Apr) (Monday) AUD) Retail Sales (MoM) (Mar) (Tuesday) (EUR) German Unemployment Change (Apr) (Tuesday) (EUR) German GDP (QoQ) (Q1) (Tuesday) (EUR) CPI (YoY) (Apr) (Tuesday) (CAD) GDP (MoM) (Mar) (Tuesday) (USD) CB Consumer Confidence (Apr) (Tuesday) (NZD) Unemployment Rate (Q1) (Wednesday)