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Greenback Correcting Its Dovish OversoldWhat market participants expected: - 2023 Sept: Betting one last rate hike (a 4th in year 2023) in Nov/Dec FOMC meeting. - 2023 Dec: No rate hike in Dec FOMC meeting. Afterwards, expected the Fed to cut in March 2024 What the Fed told us: - According to the 'dot plot', majority of committee anticipate a 50-100 bps cut by the end of 2024. - Powell once said the Fed will act if inflation comes back up. USD movement: - "Hawkish" Nov/Dec rate hike expectation fell short that was interpreted as Powell's "dovish" stance. - Implied 150 bps rate cut mismatched the Fed's projection. - Speculations amplified the "mismatch" during holiday session when traders and fed officials are in the holiday. - When volume comes back after holiday, markets act to correct. Technical view: - DXY still being the triangle, i.e. support found upon its upward trendline - Short-run key level would be 103, where around a former bottom - Actual resistance should be 104 when an inverted Head and Shoulder pattern is forming.
TVC:DXYLong
by kenhungbiz
1
Undervalued Dollar? Democrats' Influence on Rate Cut PlansUndervalued Dollar? Democrats' Influence on Powell's Rate Cut Plans Federal Reserve Chair Jerome Powell is scheduled to present his semi-annual monetary policy testimony to the House and Senate starting this Wednesday. The market will be looking for Powell to provide a more specific timeline for interest rate cuts. Currently, the market is pricing in three interest rate cuts by the Federal Reserve this year, with the first expected in June. However, the market is likely to be disappointed, with Powell keeping tight-lipped and echoing the sentiments of other Fed officials, suggesting that the first rate cut may occur "later this year." Although the market might be disappointed by the lack of a clear timeline, it will likely take no news as good news though and have no reason to amend their forecast to any time later than June. This could be undervaluing the US dollar, as the market overlooks “higher for even longer”. When the market finally comes to terms with this, targets for a stronger USD could include those levels designated on the chart. What could break Powell's tight lips is pressure from Democrats, who could advocate for interest rate cuts to support the strength of the economy in an election year.
by BlackBull_Markets
EUR/USD: Fluctuations and Challenges Amidst US Economic DataThe EUR/USD exchange rate continues to fluctuate within its daily range above the level of 1.0800 during Friday's American session. Economic data from the United States shows that the ISM Manufacturing PMI decreased more than expected in February, making it difficult for the US dollar to gain momentum. Nonetheless, the EUR/USD has found support around 1.0800 but still needs to surpass the 200-period Simple Moving Average (SMA) on the 4-hour chart, currently around 1.0820. The Relative Strength Index (RSI) indicator remains just below 50, indicating a lack of momentum in the recovery phase. If the EUR/USD manages to consolidate above 1.0820 and utilize that level as support, we could see the next resistance at 1.0860, followed by 1.0900-1.0910. However, a 4-hour close below 1.0800 could attract technical sellers, pushing the exchange rate towards 1.0760 and 1.0720. The EUR/USD was under bearish pressure during Thursday's American trading hours and closed in negative territory for the third consecutive day. Although the exchange rate manages to stay above 1.0800 on Friday, it might struggle to recover unless Eurozone inflation data supports the euro. Favorable comments on monetary tightening from Federal Reserve (Fed) members following the inflation data strengthened the US dollar, causing the EUR/USD to turn downward. Eurostat will publish the Harmonized Index of Consumer Prices for February, with forecasts of a 2.5% increase. I expect a breakout on the daily level of 1.088 with a break of supply and subsequent retracement for a retest before the upward momentum towards 1.0950. Best wishes and have a good start to the week everyone.
Long
by Forex48_TradingAcademy
2
EUR/USD dips as German inflation declinesThe euro is in negative territory on Thursday. In the North American session, EUR/USD is trading at 1.0800, down 0.35%. Germany’s inflation rate dropped to 2.5% y/y in February, down from 2.9% in January and lower than the market estimate of 2.6%. This was the lowest level since June 2021, as inflation continues to move closer to the European Central Bank’s target of 2%. Food and energy prices were the main drivers of the decline, while services inflation was unchanged at 3.4%. Monthly, inflation rose 0.4%, up from 0.2% in February and shy of the market estimate of 0.5%. Core CPI remained steady at 3.4%, its lowest level since July 2022. The eurozone releases February on Friday, which is also expected to decline. Headline CPI is expected to ease to 2.5%, down from 2.8% in January. Core CPI is projected to decline to 2.9%, compared to 3.3% in January. If the market estimates are on target, the drop in inflation will put pressure on the ECB to consider lowering interest rates as inflation gets closer to the ECB’s 2% target. ECB policy makers have been extremely cautious about easing monetary policy too quickly due to fears of inflation resurging, but the recipe of high interest rates and a weak eurozone economy could lead to a recession. In the US, market pricing for Fed rate cuts has been slashed and is currently in line with the Fed projection of three rate cuts this year. In December, the markets priced in as many as six rate cuts but a surprisingly robust US economy and a Fed pushback against rate expectations has pushed a March rate cut off the table, with June or September the likely dates of an initial rate cut. EUR/USD is testing support at 1.0823 . Below, there is support at 1.0760 There is resistance at 1.0885 and 1.0948
by OANDA
GBPUSD: Expecting a drop from hereEven though sterling has found recent resilience, we are in a long-term down trend. I believe the recent rally must end, fundamentally the pound is much weaker than the dollar, the UK is in recession and the US looks likely to avoid one. The FED will start cutting rates, but I believe the BoE will act sooner (or at the same time) because it doesn't have the grace of a strong economy. On the LTF's we're at the top of this current dynamic rising range, but I think we may see a break of the lower boundary, and if we do this will be the resumption of the downtrend.
Short
by Finchcliffe
FOMC FORWARD GUIDANCE SINCE 2018 w/SPXThe chart provided visually represents the forward guidance issued by the Federal Open Market Committee (FOMC) alongside the performance of various key economic indicators and market indices. The FOMC forward guidance serves as a crucial tool for signaling the Federal Reserve's monetary policy stance and future intentions, thereby influencing market expectations and economic behavior. By examining the interplay between FOMC forward guidance and these key economic indicators, investors, policymakers, and analysts can gain insights into the likely direction of monetary policy and its potential impact on financial markets and the broader economy.
SP:SPX
by koyking
USD/CAD muted after mixed retail sales reportThe Canadian dollar is drifting on Friday. In the European session, USD/CAD is trading at 1.3468, down 0.1%. With no tier-1 events on the data calendar, we can expect a quiet day for the Canadian dollar. Canada’s retail sales report on Friday was a mixed bag. Consumers sharply reduced their spending in January following better-than-expected retail sales in December. Let’s start with the good news. The end of 2023 saw strong consumer spending, with a gain of 0.9% m/m in December, revised upwards from 0.7% and beating the market estimate of 0.8%. The increase was led by higher sales for motor vehicles, fuel and food. In the fourth quarter, retail sales rose by a respectable 1%. The news was not nearly as positive in January. The preliminary estimate of -0.4% m/m points to a sharp pullback in consumer spending. The slowdown in retail activity in January could continue as more householders renew their mortgages at higher rates, leaving less money for discretionary spending. The Bank of Canada has repeatedly stated that rate decisions will be data-dependent, and we’ll have to wait and see what BoC policy makers make of the mixed retail sales release. Canada releases December GDP next week, followed by the BOC rate decision on February 29. Three top Federal Reserve officials reiterated on Thursday that the Fed is planning to lower interest rates this year but not just yet. Fed Vice Chair Philip Jefferson and Governors Lisa Cook and Christopher Waller said that inflation was headed in the right direction but urged patience. In December, the markets had priced in a rate cut in March at over 70% but that has dissipated to just 2.5% currently, according to the CME FedWatch tool. The strong US economy and constant pushback from the Fed against rate cuts in March have forced the markets to look ahead. Investors have currently priced in a 65% chance of a rate cut in June, compared to 74% just one week ago. USD/CAD is testing support at 1.3477. Below, there is support at 1.3446 1.3514 and 1.3545 are the next resistance lines
by OANDA
EURNZD: Reversal Perspective & Technical AnalysisEURNZD has a bearish structure supported by a descending channel, with a high registered at 1.7935 on January 22nd. Currently, the price is in the H4 demand zone. I expect a possible trend reversal, with a change in structure to the upside on M15 followed by a retest in the BOS impulse zone. In this case, if the market follows this scenario, I would enter a long position during the retest only if the price does so within one of my three market entry timings. My target would be the level 1.7701, where there is a swing high with liquidity yet to be absorbed on H4. Greetings and happy trading to everyone from Nicola.
Long
by Forex48_TradingAcademy
1
EURUSD | Long to 1.10: Seizing Liquidity Surge!EUR/USD maintains modest daily gains just below 1.0800 in Friday's American session. The US dollar struggles to gain strength following the downward revision of December's CPI, allowing the pair to advance. However, EUR/USD fails to sustain its bullish momentum after a two-day bounce and continues to move sideways below 1.0800 as investors look for new catalysts. Cautious comments from ECB officials continue to support the euro. In the United States, the only significant event on Monday will be the Monthly Budget Statement for January. Meanwhile, the USD Index is in a consolidation phase after Monday's strong rebound. In Europe, Economic Sentiment for Germany and the eurozone is expected on February 13. EUR/USD ends the week with a positive balance, while GBP/USD appears to encounter resistance around 1.2650. In Japan, Producer Price Index and Industrial Production data are expected on February 13. USD/JPY approaches 150.00. In Australia, the Westpac Consumer Confidence Index kicks off the week, while AUD/USD remains uncertain around 0.6500. In essence, the dollar remains weak, but the signals on EUR/USD are clear and defined. The price has surpassed the downtrend line at the 1.0840 level and tested it again on Friday, this time at 1.0730, before taking liquidity below December's daily low. I expect further retracement to the 1.0700 level before witnessing a possible recovery towards the 1.10 zone. I will keep you updated on the evolving situation. Best regards and happy trading to all.
Long
by Forex48_TradingAcademy
10
XAUUSD | The return to $1900 is getting closer!The price of gold has seen a decline below $2,030, after reaching $2,040 in response to recent changes in inflation trends in the United States. Meanwhile, the yield of the main ten-year US government bond remains steadily above 4.1%, creating hurdles for the XAU/USD currency pair in seeking positive momentum. Currently, the price of gold (XAU/USD) is in a consolidation phase, remaining within a trading range already evident since the beginning of the week. Stronger macroeconomic data from the United States, along with assertive comments from various influential members of the FOMC, indicate that the Federal Reserve (Fed) will maintain high interest rates for an extended period. This situation, coupled with growing confidence in "risk" in global stock markets, poses a significant obstacle for gold, traditionally considered a safe haven. Investors remain awaiting the upcoming US consumer inflation data, which could provide crucial insights into the timing and potential frequency of Fed rate cuts in 2024. Downward revisions to December's monthly inflation data, from 0.3% to 0.2%, will help shape the Fed's future decisions. The Fed's readiness to lower interest rates will directly impact the price of gold, reducing its opportunity cost as a non-profitable asset. Currently, the probability of a 25 basis point interest rate cut in May, according to the CME FedWatch tool, stands at 51%. The Fed, in considering rate cuts, continues to closely monitor its dual mandate of inflation control and employment promotion. In the context of the US labor market, weekly initial jobless claims data indicate a positive trend, with a steady decrease. Uncertainty about future Fed rate cuts is leading to increased use of the US Dollar by market operators. Personally, I anticipate further liquidation below $2,007, following the downward trend supported by the channel outlined in the chart, followed by a rally up to retest the $2,054 trendline, then a decline towards the $1,920 level. Wishing everyone a good weekend, Nicola.
OANDA:XAUUSDShort
by Forex48_TradingAcademy
3
USOIL | Downward to $73.50 before touching $80The price of WTI oil maintains an upward direction after Israel rejected Hamas' ceasefire agreement. West Texas Intermediate (WTI), the benchmark for U.S. crude oil, rose by 0.25% towards the end of the North American session, while the conflict between Israel and Hamas intensified with Israel rejecting a ceasefire offer. On Friday, the Israeli army continued its offensive in the Gaza Strip, resulting in a 3% increase in oil prices compared to the previous day. Additionally, refinery closures in the United States led to higher gasoline and diesel prices. Ukraine's attacks on two oil refineries in southern Russia, and the latter exceeding its plans for crude oil exports in February compared to the agreement with OPEC+, favored the increase in WTI prices. WTI Price Analysis: Technical Outlook Oil prices are expected to remain within a range but tilted downwards, as the 200-day moving average (DMA) at $77.29 remains the first resistance level for prices. A breach of the latter could pave the way for further gains towards $80.00 per barrel. However, despite the bullish trend, the Relative Strength Index (RSI) has maintained a flat slope, and strong resistance could lead to challenging the 20-day DMA at $74.53. A breach of the latter will expose the recent swing low at $71.46. Currently, with the daily closure of a bearish candle, specifically a doji at the 0.70% Fibonacci level, a downturn is expected to the $73.30 level, where the price could find support and then continue the bullish trend with the goal of reaching the $80 level, i.e., surpassing the buying liquidity level at $79.78. Greetings and have a good start to the week everyone.
TVC:USOILLong
by Forex48_TradingAcademy
2
USD/CAD: Upsurge with US CPI Data and Canadian EmploymentThe USD/CAD exchange rate is gaining momentum for the second consecutive day during the early Asian session on Wednesday. This increase is supported by the US January Consumer Price Index (CPI) inflation data, which is boosting the US Dollar and government bond yields. The Core CPI, which excludes volatile food and energy prices, rose by 3.9%, surpassing the market consensus of 3.7%. On a monthly basis, both the CPI and the Core CPI increased by 0.3% and 0.4% respectively. Canadian labor market data was surprisingly strong, with an increase of 37,000 jobs that more than doubled forecasts. A healthier labor market outlook could persuade the Bank of Canada (BoC) to delay interest rate cuts until June rather than April. Governor Tiff Macklem stated that the central bank has shifted its focus from debating whether interest rates are high enough to how long the central bank should keep rates at current levels. Retail Sales and Producer Price Index (PPI) data are scheduled for Thursday and Friday respectively. These data could provide a clear direction for the USD/CAD exchange rate. On a daily basis, the price is approaching a reversal zone marked on the chart. On February 12th, the market retraced to a very physiological level at 1.3427 before starting a rally. Today, the price may dip slightly before continuing its bullish run, breaking out of the reversal zone and subsequently retesting it, with a target at 1.3740. Best regards and happy trading to everyone.
Long
by Forex48_TradingAcademy
1
USOIL is approaching $80!The price of Western Texas Intermediate crude oil, the benchmark for US oil, was around $77.50 on Friday. WTI prices rose after weaker-than-expected US retail sales data, fueling hopes that the Federal Reserve will soon begin cutting interest rates in the coming months. The conflict in Gaza between Israel and Palestinian Hamas has yet to see a resolution or significant progress toward a negotiated ceasefire, keeping energy markets nervous about potential spillover into neighboring oil-producing nations like Iran. The Organization of the Petroleum Exporting Countries (OPEC) firmly believes that global demand for crude oil will continue to grow over the next two decades, but this perspective is challenged by the International Energy Agency (IEA), which forecasts a decline in global demand in the coming months. The IEA's forecasts predict a slowdown in the growth of global crude oil demand to 1.22 million barrels per day, while OPEC forecasts a long-term increase of more than double that figure. From a technical standpoint, WTI saw its highest bids in nearly three weeks on Friday, testing $78.40 before concluding the week's trading near $78.20 at Friday's close. On the H4 chart, the price is within an upward channel that seems to support the price rally well. However, I expect a slight retracement towards the $75 area, bouncing off the Fibonacci physiological level before heading back towards $80, breaking through the first supply zone and using the second as a resistance level. Nevertheless, the price has good potential to return to November 2023 levels. Regards and happy trading to all.
TVC:USOILLong
by Forex48_TradingAcademy
3
EURUSD | Will a new rate hike arrive in September?The EUR/USD exchange rate showed a recovery above 1.0750, after touching a daily low near 1.0730 during the American session. This movement was influenced by data from the United States, which indicated an increase in producer inflation in January, higher than expected, and a marginal improvement in consumer confidence in early February. Nevertheless, the EUR/USD remains in a consolidation phase above 1.0750 on Friday, after closing positively in the two previous days. Mixed releases of macroeconomic data from the United States and a positive change in risk sentiment made it difficult for the US Dollar (USD) to maintain its position, allowing the EUR/USD to extend its recovery. Retail sales in the United States fell by 0.8% on a monthly basis in January, while weekly unemployment claims dropped to 212,000 from 220,000. According to the CME FedWatch tool, markets are currently pricing in a close to 70% probability that the Federal Reserve (Fed) will leave interest rates unchanged at the next two monetary policy meetings. Additionally, the euro (EUR) showed a retracement after hitting a new two-day high, as a measure of producer inflation in the United States (US) suggests that the work of the United States Federal Reserve is not yet finished. The EUR/USD fluctuated around the range 1.0770-1.0730 after the PPI data, then stabilizing at current exchange rates. Furthermore, on the European Central Bank front, there was an observation by a member of the Executive Board, Isabel Schnabel, about the need for a restrictive monetary policy, given concerns about a possible inflation rebound. Analyzing an H4 chart, it is evident that the price is in a reversal zone (previous demand zone), within a downtrend channel, I have identified a possible turning point at the level of 1.0824 where the price could rotate and reverse its route towards the level of 1.0650 and the level of 1.0520, the November 2023 minimum. We will see how the price will react during the week and how the operators' sentiment towards the Fed will be. I wish everyone a good weekend, regards Nicola.
Short
by Forex48_TradingAcademy
5
USD/JPY: Profitable Strategies in Market TurbulenceThe Japanese yen has strengthened slightly in response to verbal intervention by Japanese authorities. The daily chart shows an upward movement of the pair, with 151.00 as the next resistance level, followed by last year's high of 151.91. USD/JPY reached a three-month peak at 150.81 after the US Bureau of Labor Statistics reported further confirmation that inflation remains above 3%, albeit slowing down. January's inflation rate exceeded expectations, rising by 3.1% compared to the previous month's 3.4%. Excluding volatile elements, Core CPI remained steady at 3.9% compared to the previous month. Following this data, USD/JPY continued its rise, surpassing 150.00, supported by US Treasury yields. The CME FedWatch indicates that traders seem to be ignoring the possibility of rate cuts in March and May, focusing instead on June. Meanwhile, the Bank of Japan has shown uncertainty regarding its monetary policy. Although the data suggest potential sustained inflation, uncertainty persists. The Bank of Japan may delay its exit from negative rates. Japanese authorities are ready to intervene in the foreign exchange market if necessary, as reiterated by Masato Kanda and Finance Minister Shunichi Suzuki. The CPI index in the United States exceeded expectations, prompting investors to reconsider their plans for rate cuts and market intervention. We will see what the upcoming data reveal; in the meantime, happy trading to all.
Short
by Forex48_TradingAcademy
1
GBP/AUD is expected to reach the level of 1.9440GBP/AUD presents a bullish structure on H4. After the increase in unemployment demand data for Great Britain, the market gained strength by breaking through a supply zone now turned reversal zone, where I now expect a retracement before continuing the uptrend with the target of the supply zone at the level of 1.9440. At that level, two scenarios can be evaluated: a bullish one with the breakout of the zone and the retest before continuing towards 1.96, and a second bearish scenario where a breakout of the bullish trendline is expected with a retest on the lower side of the reversal zone and a continuation short towards 1.92. Stay tuned for further updates, greetings, and happy trading to all.
Long
by Forex48_TradingAcademy
2
GBP/USD: Impact of UK Inflation and Recovery OutlookGBP/USD has lost its traction and dropped to its lowest level in over a week, near 1.2550, following weak inflation data in the UK on Wednesday. Bank of England Governor Bailey stated that inflation data hadn't really changed their outlook since the February monetary policy decision. After closing in negative territory on Tuesday, GBP/USD continued to decline in Wednesday's European session and touched its lowest level in over a week below 1.2550. The short-term technical outlook suggests that the pair still has room to fall before becoming technically overbought. January's US Consumer Price Index (CPI) data triggered a rally in the US dollar during Tuesday's American trading hours and caused a sharp drop in GBP/USD. On a monthly basis, both CPI and Core CPI, which excludes volatile food and energy prices, increased by 0.3% and 0.4% respectively. Both of these figures exceeded analyst estimates and boosted the US dollar. Wednesday morning, the UK's Office for National Statistics (ONS) reported that the annual CPI inflation and core CPI inflation remained steady at 4% and 5.1% respectively. CPI decreased by 0.6% in January, while the monthly Consumer Price Index fell by 0.3%. Although these data aren't weak enough to prompt Bank of England policymakers to consider a policy change, they still make it difficult for the Pound to recover. Inflation is expected to fall to target by spring. What happens to inflation in spring won't determine monetary policy. UK debt demand is strong, has been strong since the beginning of the year. Overall, the situation for the Pound isn't the best considering a likely seasonal dollar rally towards the end of February and March. On the daily chart, a downtrend channel is noticeable after a retest in the supply zone and Fibonacci level 0.705, while I await a breakout of the demand zone at levels 1.2549 and 1.2448, then a retest on the lower side of the same zone and subsequently a bounce at level 1.2320, where we have an additional demand zone and a sensitive Fibonacci level. Upon reaching that level, it will be interesting to evaluate potential upward movement. Greetings and happy trading to all.
Short
by Forex48_TradingAcademy
2