. Weekly FX Analysis - Explore currency reactions to US PCE.

Weekly FX Analysis – Explore currency reactions to US PCE.

Weekly FX Analysis – Explore currency reactions to US PCE.

30 Mar 2024

Introduction

GBP/USD shows marginal gains following the US Personal Consumption Expenditures (PCE) data in currency markets, meeting market expectations. The US PCE Price Index rose by 2.5% YoY and 0.3% MoM in February, aligning with forecasts. With investors now focusing on upcoming employment figures for potential rate cut implications, GBP/USD trades around 1.2640. Meanwhile, EUR/USD remains subdued below 1.0800, responding minimally to the US PCE data, while USD/JPY experiences slight downward pressure post-release.

Markets In Focus Today – GBP/USD

GBP/USD was mildly up after PCE figures from the US met expectations.

The US PCE Price Index, rose to 2.5% YoY and 0.3% MoM in February, in line with market expectations. The core PCE also met expectations. With inflation indicators in sight, investors will eye next week’s employment data, as its influence can potentially postpone any rate cut decision. In Friday’s session, GBP/USD is being traded around 1.2640, registering a variation of 0.14% as investors digest the US February Personal Consumption Expenditures (PCE) figures. Inflation in the US increased slightly to 2.5% annually in February, as per the PCE Price Index, which the Fed prefers for tracking inflation. This was a minor rise from January’s 2.4% and met expectations. The index rose by 0.3% from the previous month, a tad lower than the 0.4% forecast. Core PCE, excluding food and energy, also rose by 2.8% annually, aligning with predictions, and showed a 0.3% monthly increase. With January’s core PCE figures revised up, ongoing inflation may lead the Federal Reserve (Fed) to maintain higher interest rates. Upcoming employment data will be key for future policy decisions, potentially affecting the timing and extent of rate cuts.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2657 | Negative Crossover | Bearish
  • MA 20 : 1.2679 | Negative Crossover | Bearish
  • MA 50 : 1.2673 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.2663 | Negative Crossover | Bearish
  • MA 20 : 1.2716 | Negative Crossover | Bearish
  • MA 50 : 1.2675 | Negative Crossover | Bearish

RSI (Relative Strength Index): 42.2955 | Sell Zone | Bearish

Stochastic   Oscillator : 17.3231 | Sell Zone | Neutral

Resistance   And Support Levels :

  • R1 : 1.2735 R2 : 1.2794
  • S1 : 1.2541 S2 : 1.2482

Overall Sentiment: Bearish Market Direction: Sell

Trade Suggestion: Limit Sell: 1.2658 | Take Profit: 1.2516 | Stop Loss: 1.2758

EUR/USD

EUR/USD is steady below 1.0800 after US PCE meets expectations.

EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips. Fed Chair Jerome Powell is set to speak ahead of the weekly close. The EUR/USD pair broke below the 1.0800 threshold on Thursday, reaching a fresh March low of 1.0774 during European trading hours. The pair bounced from such a low but retained its negative tone and settled in the 1.0790 price zone. The US Dollar benefited from hawkish Federal Reserve (Fed) comments, as Governor Chris Waller confirmed the central bank is in no rush to trim rates. Conversely, the Euro suffered from tepid local data, as Germany reported Retail Sales fell 2.7% YoY in February, much worse than the 0.8% slide anticipated. Comments from European Central Bank (ECB) Board member Fabio Panetta passed unnoticed.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0833 | Negative Crossover | Bearish
  • MA 20 : 1.0847 | Negative Crossover | Bearish
  • MA 50 : 1.0851 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.0840 | Negative Crossover | Bearish
  • MA 20 : 1.0873 | Negative Crossover | Bearish
  • MA 50 : 1.0834 | Negative Crossover | Bearish

RSI (Relative Strength Index): 40.5447 | Neutral Zone | Neutral

Stochastic   Oscillator : 10.7265 | Sell Zone | Neutral

Resistance   And Support Levels :

  • R1 : 1.0876 R2 : 1.0924
  • S1 : 1.0722 S2 : 1.0674

Overall Sentiment: Bearish Market Direction: Sell

Trade Suggestion: Limit Sell: 1.0804 | Take Profit: 1.0709 | Stop Loss: 1.0885

USD/JPY

USD/JPY edges lower as US Core PCE cools as foreseen.

USD/JPY dips following February’s Core PCE data, indicating a gradual cooling of inflation but concerns linger. Fed officials maintain a cautious outlook on rate cuts, awaiting further evidence of sustained disinflationary trends. The market awaits insights from Fed Chair Powell and other Fed speakers. The USD/JPY posts minuscule losses following the release of the US Core Personal Consumption Expenditure (PCE) price index, the US Federal Reserve’s preferred inflation gauge. Data came as expected with prices continuing to trend lower, though at a slower pace. The major trades at 151.25, down 0.09%. USD/JPY reacts modestly to the latest US economic indicators.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 150.8959 | Positive Crossover | Bullish
  • MA 20 : 150.3200 | Positive Crossover | Bullish
  • MA 50 : 149.2647 | Positive Crossover | Bullish

Simple :

  • MA 10 : 151.0953 | Positive Crossover | Bullish
  • MA 20 : 149.7700 | Positive Crossover | Bullish
  • MA 50 : 149.3790 | Positive Crossover | Bullish

RSI (Relative Strength Index): 62.5054 | Buy Zone | Bullish

Stochastic   Oscillator : 87.8969 | Buy Zone | Neutral

Resistance   And Support Levels :

  • R1 : 150.8153 R2 : 151.9920
  • S1 : 147.0060 S2 : 145.8293

Overall Sentiment: Bullish Market Direction: Buy

Trade Suggestion: Limit Buy: 150.74 | Take Profit: 151.95 | Stop Loss: 140.98

NZD/USD

NZD/USD remains under selling pressure below 0.6000.

NZD/USD edges lower to 0.5970 amid stronger USD and dovish comments from RBNZ. The US economy grew faster than expected in the fourth quarter (Q4). RBNZ’s Orr said the central bank is on course to get inflation back into the target band, rate cuts are getting closer. The US February Core PCE will be in the spotlight on Friday. The NZD/USD pair remains under some selling pressure near 0.5970 after retracing from the 0.6000 barrier during the Asian session on Friday. The dovish comments from the Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr weigh on the New Zealand Dollar (NZD). On the Kiwi front, the RBNZ Governor Orr said the central bank is on track to getting inflation back into the target band while adding that interest rates have peaked and cuts are getting closer. The RBNZ indicated that it may cut rates from early next year. However, investors have priced in cuts from August this year. This, in turn, drags the NZD lower and acts as a headwind for the NZD/USD pair.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6019 | Negative Crossover | Bearish
  • MA 20 : 0.6055 | Negative Crossover | Bearish
  • MA 50 : 0.6095 | Negative Crossover | Bearish

Simple :

  • MA 10 : 0.6020 | Negative Crossover | Bearish
  • MA 20 : 0.6077 | Negative Crossover | Bearish
  • MA 50 : 0.6101 | Negative Crossover | Bearish

RSI (Relative Strength Index): 32.4104 | Sell Zone | Bearish

Stochastic   Oscillator : 7.5444 | Sell Zone | Neutral

Resistance   And Support Levels :

  • R1 : 0.6182 R2 : 0.6224
  • S1 : 0.6044 S2 : 0.6002

Overall Sentiment: Bearish Market Direction: Sell

Trade Suggestion: Limit Sell: 0.6001 | Take Profit: 0.5927 | Stop Loss: 0.6056

Elsewhere In The Forex Market

NZD/USD up 0.12% to 0.5979, The USD/CHF down 0.02% to 0.9014. The EUR/GBP up 0.06% at 0.8582. USD/CAD is up 0.02% at 1,3543. AUD/NZD is down 0.09% at 1.0899, The USD/CNY is down 0.08% at 7.2198, and AUD/SEK is down 0.04% at 6.9446, at the time of writing.

Key Economic Events & Data Release Today:

(CNY) Caixin Manufacturing PMI (Mar) (Monday) (USD) Manufacturing PMI (Mar) (Monday) (USD) ISM Manufacturing PMI (Mar) (Monday) (AUD) RBA Meeting Minutes (Tuesday) (EUR) German Manufacturing PMI (Mar) (Tuesday) (EUR) German CPI (MoM) (Mar) (Tuesday) (USD) JOLTs Job Openings (Feb) (Tuesday) (EUR) CPI (YoY) (Mar) (Wednesday) (USD) ADP Nonfarm Employment Change (Mar) (Wednesday) (USD) Fed Chair Powell Speaks at 21:40 (Wednesday) (AUD) Retail Sales (MoM) (Thursday) (USD) Initial Jobless Claims (Thursday)