USD/JPY Price Analysis – July 03, 2024
Daily Price Outlook
During the European trading session, the USD/JPY pair continued its bearish trend and edged lower around the 161.31 level, hitting an intraday low of 161.14. The downward movement can be attributed to the weakening US dollar, which lost traction due to lackluster economic data, raising expectations of Fed rate cuts in 2024, and putting pressure on the currency.
Moreover, the prospect of FX intervention by Japanese authorities adds uncertainty to the pair's outlook. Traders will closely monitor economic indicators, central bank communications, and geopolitical developments for insights into the future direction of USD/JPY.
Impact of Dovish Fed and Economic Data on USD/JPY Pair
On the US front, recently released downbeat economic data have raised expectations that the Federal Reserve (Fed) might consider cutting interest rates in 2024. US Treasury yields have declined in response to these lackluster data releases, signaling reduced confidence in the economic outlook.
Fed Chair Jerome Powell's recent comments about the central bank's cautious approach towards inflation and the need for more evidence before adjusting rates have fueled market speculation. This dovish stance by the Fed has weighed on the US Dollar, contributing to its losses in the USD/JPY pair.
Impact of Japanese Intervention Speculation on USD/JPY Pair
On the BOJ front, the recent weakening of the Japanese Yen has raised concerns among policymakers about its potential impact on the economy.
As the Yen depreciates against the US Dollar (USD), it could increase import costs, potentially leading to higher inflation and reduced purchasing power for Japanese consumers. To counteract these effects, there is speculation that Japanese authorities may intervene in the currency markets.
This intervention could involve selling Yen and buying Dollars to stabilize the exchange rate. By doing so, they hope to maintain stable import prices, support consumer confidence, and mitigate any adverse economic impacts caused by a weakening Yen.
Therefore, the speculation of Japanese intervention to stabilize the Yen could impact the USD/JPY pair by potentially halting or reversing the Yen's depreciation trend against the US Dollar.
USD/JPY - Technical Analysis
The USD/JPY pair is currently trading at $161.379, experiencing a slight decline of 0.11% in early trading. On the 4-hour chart, pivotal technical levels are clearly outlined. The pivot point is established at $161.1430, which could serve as a significant threshold for determining the market's direction today.
Immediate resistance levels are noted at $161.9460, $162.3800, and $162.8150. A break above these resistance points might signal further upward momentum, potentially leading to new highs.
Conversely, immediate support is identified at $160.7830, with further support levels at $160.2900 and $159.8800. These levels could offer buying opportunities if the price continues to fall.
The technical indicators present a mixed outlook. The Relative Strength Index (RSI) is currently at 53, suggesting a relatively neutral stance but leaning slightly towards the bearish side due to the recent price drop.
The 50-day Exponential Moving Average (EMA) is positioned at $160.7320, indicating a bullish trend as long as the price remains above this level. The EMA acts as dynamic support, and a sustained price above this level would reinforce a bullish outlook.
Given the current market scenario, a prudent trading strategy would be to enter a long position if the price moves above $161.154. Setting a take-profit target at $161.945 aligns with immediate resistance levels, ensuring a favorable risk-reward ratio while capturing potential upward movement.
A stop-loss at $160.785, just below immediate support, helps mitigate risk from unexpected downward shifts.
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AUD/USD Price Analysis – July 04, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained a bullish stance, consolidating around the 0.6716 level and reaching an intraday high of 0.6722.
The upward momentum was driven by multiple factors, including positive Australian economic data, particularly encouraging Retail Sales figures for May, which bolstered expectations of a potential rate hike by the Reserve Bank of Australia (RBA).
This provided substantial support to the Australian dollar (AUD). Additionally, the US dollar (USD) weakened as markets increasingly priced in the likelihood of Federal Reserve (Fed) interest rate cuts, further enhancing the AUD/USD pair's gains. Moreover, risk-on sentiment in the markets also contributed to the pair's upward movement.
Impact of Strong Australian Economic Data on AUD/USD Pair
On the AUD front, the Australian Dollar (AUD) rose following stronger-than-expected Retail Sales data for May, boosting expectations of a potential rate hike by the Reserve Bank of Australia (RBA).
The robust growth in Retail Sales suggests economic strength, prompting discussions that the RBA might consider raising interest rates as soon as August. This positive economic indicator has bolstered confidence in the AUD, reflecting market optimism about Australia's economic outlook amidst global uncertainties.
On the data front, Australia's Retail Sales for May showed a 0.6% month-on-month increase, up from 0.1% previously, as reported by the Australian Bureau of Statistics (ABS) on Wednesday.
The Australian Dollar's strength was also supported by slight improvements in Judo Bank's Australia Purchasing Managers Index (PMI) for June.
Therefore, the stronger Retail Sales and improved economic outlook have lifted the AUD/USD pair, fueled by expectations of potential RBA rate hikes and positive market sentiment towards Australia's economy.
Impact of US Economic Data and Fed Stance on AUD/USD Pair
On the US front, the previously released weaker-than-expected economic data continues to weigh on the US dollar, which was seen as another key factor that kept the AUD/USD pair higher.
However, Federal Reserve (Fed) officials' cautious stance could strengthen the USD and limit gains in the AUD/USD pair. Chicago Fed President Austan Goolsbee remarked early Thursday that achieving 2% inflation will require time, highlighting ongoing economic uncertainties.
Meanwhile, the recent minutes from the FOMC's June meeting revealed that Fed policymakers lack confidence in the need for an immediate interest rate cut, preferring a data-dependent approach to monetary policy.
Markets now anticipate a 66% probability of a 25 basis points Fed rate cut in September, up slightly from earlier expectations.
On the economic front, the private sector added 150,000 jobs in June, slightly less than expected and down from 157,000 in May. At the same time, more people filed for unemployment benefits, reaching the highest level in 2-1/2 years, showing weakening job market conditions.
Furthermore, the Services Purchasing Managers' Index (PMI) for June dropped to 48.8, signaling a contraction in the services sector and hitting its lowest point since May 2020, much lower than predicted.
Therefore, the weaker US economic data and cautious Fed stance could support the AUD/USD pair, while signs of job market weakness and a contracting services sector in the US may limit the pair's upside trend.
AUD/USD - Technical Analysis
The AUD/USD pair is currently trading at $0.67156, marking a modest gain of 0.11% in the early trading session. The 4-hour chart reveals pivotal technical levels that traders should watch closely.
The pivot point at $0.6733 is critical, acting as a potential fulcrum for either a bullish continuation or a bearish reversal. Immediate resistance levels are seen at $0.6749, $0.6767, and $0.6787.
Breaking above these resistance levels could open the path for further upward momentum, challenging higher price territories.
Conversely, support levels are identified at $0.6701, with subsequent supports at $0.6680 and $0.6655.
These levels could offer buying opportunities should the price experience a pullback. Technical indicators provide a mixed outlook; the Relative Strength Index (RSI) is currently at 66, nearing the overbought zone.
An RSI close to 70 typically indicates overvaluation, suggesting a possible bearish correction in the near term.
The 50-day Exponential Moving Average (EMA) stands at $0.6663, reinforcing a bullish sentiment as long as the price remains above this average. The EMA acts as dynamic support, and maintaining a price above this level could sustain the bullish bias.
Given the current market setup, a conservative trading strategy would be to enter a long position if the price breaks above $0.67008.
Setting a take-profit target at $0.67321 aligns with the pivot point, ensuring a favorable risk-reward ratio while capturing potential upside movement. A stop-loss at $0.66809, just below immediate support, limits downside risk from unexpected price dips.
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GOLD Price Analysis – July 04, 2024
Daily Price Outlook
Despite the risk-on market sentiment, Gold (XAU/USD) gained upward momentum, reaching around $2,354 per ounce and touching an intra-day high of $2,362.
This slight upward trend could be attributed to a weaker US dollar, which lost traction amidst increasing expectations that the Federal Reserve (Fed) may initiate a rate-cutting cycle later this year.
Investors appeared cautious ahead of the upcoming US Non-Farm Payrolls (NFP) report scheduled for Friday. However, the risk-on market sentiment, influenced by low trading activity due to the US Independence Day holiday, was seen as a factor limiting further gains in the Gold price.
Impact on Gold Prices Amid US Economic Concerns and Dollar Weakness
On the US front, the broad-based US dollar dropped as many believed the Federal Reserve might start cutting interest rates later this year. This belief grew stronger after recent economic reports showed weaknesses in job markets and signs of the economic slowing down.
The minutes from the latest Federal Open Market Committee meeting confirmed that policymakers are worried about the US economy cooling off gradually. This led to lower yields on US Treasury bonds, which in turn pushed the US dollar to its lowest point in three weeks.
On the economic front, the private sector added 150,000 jobs in June, slightly less than expected and down from 157,000 in May. At the same time, more people filed for unemployment benefits, reaching the highest level in 2-1/2 years, showing weakening job market conditions.
Furthermore, the Services Purchasing Managers' Index (PMI) for June dropped to 48.8, signaling a contraction in the services sector and hitting its lowest point since May 2020, much lower than predicted.
These trends highlight ongoing economic challenges in the US, which are likely influencing the Federal Reserve's decisions on interest rates.
Therefore, the weakening US dollar and concerns over economic slowdown have boosted gold prices. Investors seek gold as a hedge against economic uncertainty and potential future rate cuts by the Federal Reserve.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2355.755, up 0.13% in the early European session. The 4-hour chart highlights crucial technical levels.
The pivot point at $2360.44 is significant, serving as a potential reversal or continuation point in today's trading. Immediate resistance levels are at $2368.99, $2377.06, and $2384.50. Breaching these levels may trigger a sell-off.
Immediate support is identified at $2347.61, with further support at $2341.81 and $2336.27. These levels provide potential buying opportunities if the price dips.
Technical indicators suggest caution. The Relative Strength Index (RSI) is at 68, nearing the overbought zone, indicating a possible bearish correction. An RSI near such high levels often signals overvaluation, increasing the likelihood of a price drop.
The 50 EMA is at $2327.71, indicating a bullish trend as long as the price remains above this moving average. The EMA acts as dynamic support, reinforcing a bullish bias, provided prices stay above it.
Given the market setup, a conservative strategy would be to sell gold if it falls below the pivot point of $2360.44. An entry price at $2360 aligns with potential bearish correction.
Traders should set a take-profit target at $2345, matching immediate support levels, ensuring a favorable risk-reward ratio while capturing downside movement. A stop-loss at $2368, just above immediate resistance, limits losses from unexpected upward moves.
In summary, while gold remains bullish above its 50 EMA, the near-overbought RSI and key resistance levels suggest a potential short-term bearish correction.
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GOLD Price Analysis – July 03, 2024
Daily Price Outlook
Gold prices (XAU/USD) kicked off the day on a bullish note, showing strong momentum despite the renewed strength of the US dollar and a generally risk-on market sentiment. Gold is currently trading around $2,343 mark, hitting the intraday high of $2,347 level.
However, the upward trend was mainly fueled by mounting expectations of upcoming rate cuts by the Federal Reserve in both September and December. These expectations were bolstered by Federal Reserve Chair Jerome Powell's recent dovish remarks.
Conversely, worries about a potential global economic slowdown, compounded by ongoing geopolitical tensions and political uncertainties in the US and Europe, are weighing on gold prices.
These factors are introducing significant volatility into the market, impacting investor sentiment and molding the trajectory of the precious metal's price fluctuations. Investors are closely monitoring developments in economic indicators and central bank policies for further clues on the future direction of gold prices amidst this complex landscape.
However, the rise in gold prices might be slowing down as traders are cautious about making bold moves. They are waiting for clearer signals about the Federal Reserve's future plans.
Therefore, the market will pay close attention to the release of the FOMC meeting minutes later today. In the meantime, traders will watch important US economic reports like the ADP employment report and the ISM Services PMI for more insights.
Impact of US Economic Data and Fed Outlook on Gold Prices
On the US front, the strength of the US dollar has increased, supported by strong labor market data that surpassed forecasts. This has lessened investor expectations for a Federal Reserve rate cut in September.
The robust economic data suggests resilience in the economy, easing immediate pressure for monetary policy easing. However, despite this positive news, markets are still anticipating higher chances of a rate cut in September and the possibility of another cut in December.
Meanwhile, investors are cautious as they wait for clarity on the Federal Reserve's position on interest rates. Fed Chair Jerome Powell has indicated satisfaction with inflation progress but stressed the need to be confident that inflation will consistently move toward the 2% target before considering any rate cuts.
On the data front, JOLT job openings unexpectedly increased from 7.919 million in April to 8.140 million in May, surpassing economists' expectations of 7.910 million.
This uptick indicates a strengthening US labor market, which has the potential to bolster wages and disposable income. Increased disposable income could stimulate consumer spending, potentially contributing to demand-led inflation pressures.
Therefore, the bullish US dollar and reduced rate cut expectations may limit gold's rise. Meanwhile, the positive economic data and Fed caution could stabilize prices, but rising job openings could boost consumer spending and inflation fears, supporting gold.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently exhibiting bullish momentum, trading at $23450.460, up 0.73% on the day. This rise is supported by a favorable technical setup and positive market sentiment, as investors digest the latest economic data and central bank commentary.
The key price levels indicate a strong bullish trend with immediate resistance at $2349.34, followed by $2356.79 and $2364.24. On the downside, immediate support is found at $2328.26, with further support levels at $2315.91 and $2310.59.
The technical indicators reinforce this positive outlook. The Relative Strength Index (RSI) is at 65, suggesting that while the market is nearing overbought territory, there is still potential for further gains before a correction might be necessary.
The 50-day Exponential Moving Average (50 EMA) at $2326.13 acts as a dynamic support level, maintaining the overall bullish structure of the market. As long as the price remains above the pivot point of $2337.41 and the 50 EMA, the upward trend is likely to continue.
The recommended strategy is to enter above $2336, set a take-profit target at $2357, and place a stop loss at $2321.
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EUR/USD Price Analysis – July 03, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair continued its mild bullish trend and remained well bid around the 1.0761 level, hitting an intraday high of 1.0764.
The mild upward trend was attributed to renewed selling pressure in the US dollar, which lost some of its gains on the back of mounting expectations of upcoming rate cuts by the Federal Reserve in both September and December. These expectations were bolstered by Federal Reserve Chair Jerome Powell's recent dovish remarks.
Impact of Eurozone Inflation and ECB Policy Uncertainty on EUR/USD Pair
On the EUR front, Eurozone headline inflation eased to 2.5% in June from 2.6% in May, while core inflation held steady at 2.9%, slightly above expectations of 2.8%. These figures indicate ongoing uncertainty over future price trends, complicating the European Central Bank's (ECB) interest rate stance.
ECB President Christine Lagarde noted positive inflation trends at the ECB Forum on Central Banking, suggesting progress in disinflation efforts.
Meanwhile, ECB policymaker Gabriel Makhlouf supports one potential rate cut this year but disagrees with market expectations for two cuts, leaving room for further monetary policy uncertainty. In political news, EU's second-largest nation saw strategic candidate withdrawals ahead of parliamentary elections aimed at countering far-right gains.
Therefore, the mixed inflation data and ECB's uncertain rate outlook could lead to volatility for the EUR/USD pair, influenced by market perceptions of Eurozone economic stability and ECB policy direction amid political developments in the EU.
Impact of Weakening US Dollar and Fed Expectations on EUR/USD Pair
On the US front, the weakening US dollar, despite strong labor market data exceeding forecasts, has heightened expectations for a Federal Reserve rate cut in September. This economic resilience suggests a potential easing of monetary policy.
Fed Chair Jerome Powell, while noting progress in inflation, remains cautious, emphasizing the need for sustained inflation trends toward the 2% target before considering rate adjustments. Additionally, JOLT job openings unexpectedly rose, indicating a robust labor market that could boost consumer spending and inflation concerns.
These dynamics create a complex backdrop for the EUR/USD pair, potentially supporting its strength against a softer dollar.
Therefore, the weakening US dollar amid anticipated Fed rate cuts could bolster the EUR/USD pair, supported by market expectations of softer monetary policy in the US and potential economic resilience in the Eurozone.
EUR/USD - Technical Analysis
The EUR/USD pair is showing signs of modest strength, trading at $1.07576, a 0.11% increase on the day. This movement is underpinned by a bullish sentiment as the pair inches closer to its pivot point at $1.0793.
The immediate resistance level stands at $1.0794, followed by further resistance at $1.0817 and $1.0845. On the downside, immediate support is found at $1.0726, with subsequent supports at $1.0693 and $1.0668. These levels are crucial as they indicate potential areas of consolidation or reversal.
Technical indicators paint a supportive picture for the euro. The Relative Strength Index (RSI) is currently at 60, suggesting the pair has room to advance further before approaching overbought conditions.
The 50-day Exponential Moving Average (50 EMA) at $1.07160 serves as a significant support level, reinforcing the bullish bias as long as the price remains above this moving average. This alignment of technical factors suggests a favorable environment for further gains, provided key resistance levels are breached.
The EUR/USD's recent price action reflects a broader sentiment of cautious optimism among investors.
As economic data and central bank communications continue to shape market expectations, the pair's ability to sustain above its pivot point and 50 EMA will be closely watched. The RSI near 60 implies a balanced outlook, with the potential for further upside if resistance levels are surpassed
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GBP/USD Price Analysis – July 03, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair has maintained its upward trend and drew further bid around $1.2698 level. However, the bullish performance can be attributed to several factors.
Firstly, Federal Reserve Chair Jerome Powell's recent comments indicated increased confidence that the disinflation process has resumed. This has fueled speculation that the Fed might cut interest rates as early as September, weakening the US Dollar and bolstering the Pound Sterling against it.
Secondly, the Bank of England (BoE) has maintained a cautious stance on interest rates despite concerns about stubborn inflation in the UK's service sector. This relative stability in BoE policy contrasts with potential easing by the Fed, further supporting the GBP/USD pair's upward momentum.
Impact of UK Elections on GBP/USD Pair
On the UK front, the upcoming UK elections scheduled for Thursday are expected to be a major catalyst for the Pound Sterling (GBP). The market sentiment surrounding these elections plays a crucial role in shaping GBP/USD pair.
Analysts anticipate that a potential victory for the Labour Party could lead to a shift towards more expansionary fiscal policies. Such policies could bolster economic activity and potentially increase inflationary pressures in the UK, thereby supporting the Pound.
Conversely, a different election outcome, such as a continued Conservative Party leadership under Prime Minister Rishi Sunak, introduce policy continuity but could also bring uncertainties depending on their economic strategy post-election.
Therefore, the UK elections could significantly impact the GBP/USD pair as Labour Party victory might lead to expansionary fiscal policies, boosting GBP with economic activity, while Conservative continuity could bring stability amid potential uncertainties.
Impact of Powell's Comments on GBP/USD Pair
On the US front, Fed Chair Jerome Powell's remarks on disinflation and the potential for rate cuts have directly impacted the GBP/USD pair.
Powell's expressed confidence in the resumption of disinflationary trends, coupled with a cautious stance on immediate rate cuts pending further data, has softened the US Dollar. This stance has been interpreted by markets as dovish, reinforcing expectations of monetary easing by the Fed in the near term.
In contrast, the uncertainty surrounding US economic indicators such as the ADP Employment Change and the ISM Services PMI, both due this week, adds to the volatility in the USD. This environment favors the Pound Sterling, which has capitalized on the weakened Dollar to extend its gains, approaching key resistance levels.
GBP/USD - Technical Analysis
The GBP/USD pair is showing slight upward momentum, trading at $1.26930, a modest gain of 0.04% for the day. The currency pair is positioned just below its pivot point of $1.27087, suggesting a cautious yet positive outlook.
Key resistance levels are identified at $1.27015, $1.27216, and $1.27481, while support levels lie at $1.26511, $1.26332, and $1.26128. These levels highlight critical points for traders to watch, as breaking above or below these thresholds could signal further directional moves.
Technical indicators provide additional insight into the market’s dynamics. The Relative Strength Index (RSI) stands at 62, indicating that the pair is approaching overbought territory but still has room for further gains before any significant selling pressure might emerge.
The 50-day Exponential Moving Average (50 EMA) at $1.26570 serves as a crucial support level, reinforcing the current bullish trend. As long as the price stays above this moving average, the pair is likely to maintain its upward trajectory.
Market participants are closely monitoring the GBP/USD for potential impacts from ongoing economic events and central bank policies.
The pair's recent movements reflect investor sentiment and economic data releases that influence the broader forex market. With the RSI near overbought conditions and the 50 EMA providing support, traders should be cautious yet optimistic, setting entry points above key support levels and targeting gains at resistance points.
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GOLD Price Analysis – July 02, 2024
Daily Price Outlook
Gold prices (XAU/USD) continue to face downward pressure, hovering around $2,328.65 per ounce with an intraday low touching $2,324.98. This decline can be attributed to several factors, including the renewed strength of the US dollar, which has gained traction despite growing speculation about a potential Federal Reserve rate cut in September.
Meanwhile, the ongoing risk-on sentiment in the market, bolstered by increasing expectations of Donald Trump's re-election later this year, has further weighed on gold, traditionally considered a safe-haven asset.
Looking forward, traders seem cautious to place any strong position ahead of Federal Reserve Chair Jerome Powell's upcoming speech on Tuesday and the release of the FOMC meeting minutes scheduled for Wednesday.
However, the highly anticipated US monthly employment report, Nonfarm Payrolls (NFP), set for release on Friday, is poised to have a impact on market sentiment and expectations regarding future monetary policy decisions by the Fed.
Economic Data and Strong US Dollar Pressure Gold Prices Amid Fed Rate Cut Speculations
Despite the upbeat market sentiment and increasing expectations of a September rate cut by the Federal Reserve, the US dollar continues to strengthen as investors await clearer signals regarding the Fed's monetary policy stance. However, these gains in the dollar could be temporary amid growing consensus that the Fed will start rate cuts in September.
Market expectations were bolstered following Monday's release of the US ISM PMI data, which showed that the manufacturing sector contracted for the third consecutive month in June, coupled with a decline in factory input prices to a six-month low.
On the economic data front, the Institute for Supply Management reported that its Manufacturing PMI remained in contraction for the second consecutive month, slipping from 48.7 to 48.5 in June, which was below expectations.
The Employment Index also declined to 49.3 from May's 51.1, indicating a slowdown in hiring within the sector. Additionally, the Prices Paid Index, a gauge of inflation, dropped to 52.1 from 57, reflecting easing price pressures.
These figures followed the US PCE Price Index report, which revealed that May's inflation rate hit its lowest level in over three years, reinforcing expectations for potential Fed interest rate cuts.
Therefore, the economic data and strengthening US dollar continue to pressure gold prices, with expectations of potential Fed rate cuts providing limited support amid the ongoing market uncertainty.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,330.695, down 0.06% for the day. On the 4-hour chart, the pivot point is set at $2,344.00, serving as a crucial level for traders to monitor.
Immediate resistance is found at $2,347.54, followed by higher resistance levels at $2,355.68 and $2,368.78. On the downside, immediate support is located at $2,318.85, with further support at $2,307.01 and $2,294.45.
Technical indicators show a mixed outlook. The Relative Strength Index (RSI) stands at 55, indicating neutral momentum. The 50-day Exponential Moving Average (EMA) is positioned at $2,325.67, suggesting a potential support level just below the current price level.
The market sentiment for gold appears cautious, with traders awaiting further economic data and market cues. The recent price movement suggests that the precious metal is struggling to find a clear direction.
A break above the immediate resistance of $2,347.54 could signal a short-term bullish trend, while a fall below the immediate support of $2,318.85 may lead to further declines.
In conclusion, traders might consider buying gold above $2,318 with a take profit target at $2,344 and a stop loss at $2,306.
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USD/CAD Price Analysis – July 02, 2024
Daily Price Outlook
During the early European trading session, the USD/CAD currency pair maintained an upward trajectory, hovering around the 1.3743 level and peaking at 1.3756 intraday. This bullish movement was primarily driven by a stronger US dollar, bolstered by higher US Treasury bond yields.
Meanwhile, the Bank of Canada (BoC) cut interest rates to 0.75% on June 5, becoming the first G7 nation to ease monetary policy in the current cycle. This decision exerted downward pressure on the USD/CAD pair.
In contrast, oil prices remained relatively stable on Tuesday, holding close to the two-month highs reached in the previous session.
Market sentiment was buoyed by expectations of increased fuel demand during the summer travel season and speculation about potential US interest rate cuts that could stimulate economic growth. These factors supported the Canadian dollar and helped mitigate losses for the USD/CAD pair.
USD/CAD Pair Rose Amid Fed Rate Cut Expectations and Economic Data
On the US front, the USD/CAD pair's rise is underpinned by a robust US dollar and higher Treasury bond yields. Investor attention is also keenly focused on an upcoming speech by Federal Reserve Chairman Jerome Powell.
However, weaker-than-expected US ISM Manufacturing PMI figures for June have reinforced expectations that the Fed might implement an interest rate cut in September.
Currently, traders are pricing in a 68% probability of a rate reduction, a marked increase from the previous month according to the CME FedWatch tool. Despite mixed economic indicators from the US, the Federal Reserve's cautious stance continues to bolster the USD in the near term.
Therefore, the USD/CAD pair is seeing upward pressure due to a stronger US dollar and higher bond yields, compounded by expectations of a Fed rate cut following weaker US manufacturing data, supporting the dollar despite economic uncertainties.
Impact of Bank of Canada Rate Cut on USD/CAD Pair
On the CAD front, the Bank of Canada (BoC) lowered interest rates to 0.75% on June 5, making it the first G7 country to initiate monetary easing in this cycle. BoC Governor Tiff Macklem indicated that while Canada has room for further rate reductions, they must carefully consider their alignment with the US Federal Reserve's monetary policies.
However, the BoC's decision surprised some market participants due to its dovish stance, which hinted at potential future rate cuts, albeit not necessarily in a linear progression.
Douglas Porter, Chief Economist at BMO Economics, highlighted that future rate changes will depend on signs that inflation pressures are easing, indicating a careful approach to further monetary policy adjustments.
Therefore, the BoC's rate cut and dovish stance have weighed on the CAD, weakening it against the USD as investors assess diverging monetary policies between the BoC and the Fed.
USD/CAD - Technical Analysis
The USD/CAD pair is currently trading at $1.37348, showing a slight increase of 0.02% for the day. On the 4-hour chart, the pivot point is positioned at $1.3754, serving as a crucial level for traders to monitor.
Immediate resistance is located at $1.3780, with higher resistance levels at $1.3805 and $1.3833. On the downside, immediate support is seen at $1.3712, followed by support at $1.3688 and $1.3655.
Technical indicators present a mixed picture. The Relative Strength Index (RSI) is at 60, suggesting mild bullish momentum. Meanwhile, the 50-day Exponential Moving Average (EMA) is at $1.3691, providing a supportive base just below the current price level.
The market sentiment around USD/CAD indicates a cautious outlook, with traders closely watching for any economic data or market developments that could influence direction. The pair has shown resilience above the pivot point, but the immediate resistance at $1.3780 remains a significant barrier.
Should the price break above this level, it could indicate a stronger bullish trend. Conversely, a decline below the immediate support at $1.3712 may suggest further downside potential.
In conclusion, a strategic approach for traders would be to consider selling USD/CAD below $1.37544 with a take profit target at $1.37115 and a stop loss at $1.37893.
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AUD/USD Price Analysis – July 02, 2024
Daily Price Outlook
Despite the risk-on market sentiment, the AUD/USD currency pair failed to gain any positive traction and remained under pressure around the 0.6643 level, hitting the intraday low of 0.6634.
The downward trend can be linked to the Reserve Bank of Australia's (RBA) Index of Commodity Prices, which fell by 4.1% year-on-year in June, following an upwardly revised 6.0% decline in the previous month. The June decline marks the mildest deflation in sixteen consecutive months.
Meanwhile, the Minutes of the Reserve Bank of Australia's (RBA) June monetary policy meeting, released Tuesday, revealed that they decided not to raise interest rates in June, believing it was better to keep them steady.
This was seen as another key factor that undermined the AUD currency and contributed to the AUD/USD pair's decline. Moreover, the bullish US dollar, backed by the advance in US Treasury yields, has also played a major role in keeping the AUD/USD pair lower.
Impact of Recent Economic Developments on the AUD/USD Pair
On the AUD front, the Reserve Bank of Australia's (RBA) Index of Commodity Prices, fell by 4.1% year-on-year in June, marking the mildest deflation in sixteen months. The RBA's June meeting minutes, released Tuesday, showed that the board decided to keep rates steady, citing a stronger case for holding than hiking.
They highlighted upside risks to inflation, with the Melbourne Institute's Monthly Inflation Gauge rising by 0.3% in June. Deputy Governor Andrew Hauser noted that policy should not be based on a single inflation report, emphasizing the need for detailed analysis of upcoming economic data.
On the data front, the Judo Bank Australia Manufacturing PMI fell to 47.2 in June from 49.7 in May, marking the fifth consecutive monthly decline and the sharpest since May 2020. This drop indicates a faster deterioration in manufacturing conditions, reflecting ongoing challenges in the sector.
Therefore, the AUD/USD pair face pressure as the RBA keeps rates steady amidst declining commodity prices and weak manufacturing PMI, while inflation risks and upcoming economic data remain pivotal for future policy decisions.
On the positive side, the potential liquidity injections by the PBOC could bolster market sentiment, benefiting the AUD/USD pair due to Australia's economic dependency on Chinese trade.
Potential Impact of Bullish US Dollar on AUDUSD Pair Amidst Fed Rate Cut Expectations
On the US front, despite positive market sentiment and expectations of a Fed rate cut in September, the dollar is strengthening as investors await clearer signals on monetary policy. However, these gains may be short-lived amid growing consensus for upcoming rate cuts.
The US ISM PMI data released Monday showed the manufacturing sector contracted for a third straight month in June, with factory input prices falling to a six-month low. The Institute for Supply Management reported its Manufacturing PMI remained in contraction for the second consecutive month at 48.5, below expectations of 48.7.
Meanwhile, the Employment Index also declined to 49.3 from May's 51.1, signaling slower hiring. Moreover, the Prices Paid Index dropped to 52.1 from 57, indicating easing inflation pressures.
These figures, alongside the PCE Price Index showing May's inflation at its lowest in over three years, reinforce expectations for potential Fed rate cuts.
Therefore, the bullish US dollar, bolstered by potential Fed rate cuts and subdued inflation pressures, is likely to exert downward pressure on the AUDUSD pair in the near term.
AUD/USD - Technical Analysis
The AUD/USD is currently trading at $0.66514, down 0.17% for the day. On the 4-hour chart, the pivot point is set at $0.6640, providing a crucial level for traders to watch. Immediate resistance is found at $0.6660, followed by higher resistance levels at $0.6675 and $0.6690.
On the downside, immediate support is located at $0.6620, with further support at $0.6606 and $0.6591.
Technical indicators show a mixed outlook. The Relative Strength Index (RSI) stands at 48, indicating neutral momentum. The 50-day Exponential Moving Average (EMA) is positioned at $0.6655, suggesting a potential support level just above the current price.
The market sentiment for AUD/USD appears cautious, with traders awaiting further economic data and market cues. The recent price movement suggests that the pair is struggling to find a clear direction.
A break above the immediate resistance of $0.6660 could signal a short-term bullish trend, while a fall below the immediate support of $0.6620 may lead to further declines.
In conclusion, traders might consider buying AUD/USD above $0.66401 with a take profit at $0.66671 and a stop loss at $0.66227.
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EUR/USD Price Analysis – July 01, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair extended its winning streak and gained further traction around the 1.0751 level, hitting an intraday high of 1.0776.
The upward rally can be attributed to a combination of factors, including a weaker US dollar, which lost traction following the release of softer United States (US) core Personal Consumption Expenditures Price Index (PCE) data for May.
This fueled expectations of early rate cuts by the Federal Reserve (Fed) and put pressure on the US dollar, contributing to gains in the EUR/USD pair.
Additionally, the stronger-than-expected performance of Marine Le Pen's RN in France's parliamentary elections was seen as another key factor that added upward pressure on the EUR/USD pair.
EUR Strengthens Amid Reduced Political Uncertainty in France
On the EUR front, the major currency pair is strengthening following the first round of France's parliamentary elections, where Marine Le Pen's far-right National Rally (RN) performed well, albeit with a narrower lead than expected.
The uncertainty surrounding RN's chances of securing an outright majority has boosted the euro's attractiveness.
According to Carol Kong from the Commonwealth Bank of Australia, a less dominant showing by the far-right party could reduce fears of unsustainable fiscal measures, thereby boosting euro sentiment.
Meanwhile, investors are watching for signals from the European Central Bank (ECB) regarding further interest rate cuts. The ECB began easing rates in early June after maintaining a tight policy to counter pandemic-driven inflation pressures.
Looking ahead, investors eyes on the preliminary German Harmonized Index of Consumer Prices (HICP) data for June, releasing at 12:00 GMT.
Meanwhile, the economists anticipate a slower annual rise in HICP at 2.6% in the Eurozone's largest economy, down from 2.8% previously. The monthly Consumer Price Index (CPI) is expected to accelerate to 0.2% from May's 0.1%.
Therefore, the EUR/USD pair is likely strengthening due to reduced uncertainty from France's elections, where Marine Le Pen's RN performed strongly but with a narrower lead. This has boosted Euro sentiment amid expectations of potential ECB interest rate cuts.
Impact on EUR/USD Pair Amid US Dollar Correction and Rate Cut Expectations
On the US front, the broad-based US dollar edged lower following the expected decline in the US core Personal Consumption Expenditures Price Index (PCE) for May.
This reinforced expectations of early Federal Reserve (Fed) rate cuts and put pressure on USD. It should be noted that the core PCE inflation, a key Fed metric, eased to 2.6% from 2.8% previously.
Meanwhile, CME FedWatch indicates a 63.4% probability of rate cuts in September, with expectations now leaning towards two cuts this year, contrary to the Fed's initial projection of one.
However, the US Dollar Index (DXY) dipped near 105.40 as markets anticipate volatility from upcoming economic releases, starting with the ISM Manufacturing Purchasing Managers’ Index (PMI) for June, expected to show marginal improvement but continued contraction in factory activity below the 50.0 level.
Therefore, the EUR/USD pair is likely to strengthen as the US Dollar edged lower on expectations of early Fed rate cuts following softer core PCE inflation data, pushing the US Dollar Index (DXY) down to around 105.40 amid anticipated market volatility from upcoming economic releases.
EUR/USD - Technical Analysis
EUR/USD is trading at $1.07662, reflecting a robust increase of 0.42% on the 4-hour chart, indicating positive momentum. The pivot point for today stands at $1.0753, serving as a crucial benchmark for market direction.
Immediate resistance is observed at $1.0794, with subsequent resistance levels at $1.0817 and $1.0845, marking potential targets for continued bullish activity. On the downside, immediate support is positioned at $1.0726, followed by deeper support levels at $1.0693 and $1.0668, providing potential stops for a bearish reversal.
The Relative Strength Index (RSI) is currently at 68, suggesting that the currency pair is nearing overbought conditions, yet still supports a bullish sentiment. The 50-day Exponential Moving Average (EMA) at $1.0714 further supports the current price action, indicating that the short-term trend remains upward.
Traders should consider entering long positions above the pivot point of $1.07529, targeting a take profit level at $1.07927. A stop loss at $1.07266 is advisable to manage downside risks effectively.
The alignment of technical indicators, including the elevated RSI and the supportive 50-day EMA, points to a bullish outlook for EUR/USD, provided it stays above the pivot point.
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