USD/JPY Price Analysis – May 2, 2024
Daily Price Outlook
During the European trading session, the USD/JPY currency pair has shown mixed performance, currently hovering around 154.73 and consolidating within a range of 154.22 to 156.29. This fluctuation has been influenced by various factors, primarily the divergent policy outlooks of the Bank of Japan (BoJ) and the Federal Reserve (Fed).
While the BoJ has indicated a commitment to supporting the economy through accommodative monetary policy measures, the Fed has hinted at potential interest rate hikes, albeit with a cautious approach.
These contrasting approaches by the central banks have contributed to the pair's uncertain performance, with traders closely monitoring developments for further guidance on its future direction.
Japanese Yen Rallied Amid Speculations of Intervention
On the JPY front, the Japanese yen rallied amid speculation of intervention by Japan's financial authorities. However, the reports suggested that authorities may have intervened to support the yen, leading to a temporary boost in the currency's value.
This intervention impacted the USD/JPY pair, causing it to trim some of its intraday gains. However, the momentum was short-lived as expectations of a wide US-Japan rate differential dampened the yen's strength.
Positive Risk Tone Undermines Safe-Haven JPY
Another factor that has been boosting the USD/JPY pair was the generally positive risk tone in the market, which undermined the safe-haven appeal of the Japanese Yen and contributed to the USD/JPY pair's gains.
Investors' appetite for riskier assets has increased, leading to a decrease in demand for safe-haven currencies like the JPY. This shift in market sentiment has acted as a tailwind for the USD/JPY pair, limiting any significant appreciation of the yen.
US Dollar Selling and Fed's Policy Outlook
On the US front, the mild bearish US Dollar, driven by receding fears about further interest rate hikes by the Federal Reserve, has also had an impact on the USD/JPY pair.
The Fed's dovish stance, highlighted by its recent statements and the lack of change in forward guidance, has led to a decline in the USD's value. This has provided some support to the JPY and limited the upside potential of the USD/JPY pair.
USD/JPY - Technical Analysis
In today's trading, the USD/JPY has shown notable strength, climbing to 155.377, a gain of 0.58%. This movement marks a substantial shift, positioning the currency pair close to significant technical levels that could dictate the next phase of market activity.
The pivot point for USD/JPY is identified at $156.07. Above this mark, the immediate resistance level lies at $156.89. Should bullish momentum persist, the pair may encounter further resistance at $157.95 and $159.06.
These levels represent potential turning points where selling pressure could intensify. On the downside, initial support is seen at $154.60, with additional support levels at $153.60 and $152.60, which could provide a cushion if the price retreats.
From a technical standpoint, the Relative Strength Index (RSI) is at 41, indicating a lack of momentum as it trends towards the lower half of the neutral range. The 50-day Exponential Moving Average (EMA) at $156.00 is closely aligned with the current price, suggesting a critical juncture for trend determination.
Considering the current market setup and technical indicators, traders might consider a cautious approach. The recommended strategy includes selling below the pivot point of $156.072, targeting a take profit at $154.579, while placing a stop loss at $156.852 to protect against unexpected upward movements.
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AUD/USD Price Analysis – May 2, 2024
Daily Price Outlook
Despite the weaker-than-expected Trade Balance and Building Permits data, the AUD/USD currency pair maintained its upward rally and remained well bid around the 0.6541 level, hitting the intraday high of 0.6550 level.
However, the reason for its upward trend can be associated with the risk-on market sentiment, which tends to underpin riskier assets like the Australian dollar.
Moreover, the hawkish sentiment surrounding the Reserve Bank of Australia’s (RBA) maintaining higher interest rates was seen as another key factor that kept the AUD/USD pair higher.
On the other side, the US dollar lost some traction following dovish remarks from Federal Reserve Chairman Jerome Powell. Powell dismissed the likelihood of a further rate hike, contributing to pressure on the US dollar and further boosting the AUD/USD currency pair.
Impact of RBA's Hawkish Stance and Economic Data on AUD/USD Pair
On the AUD front, the Australian Dollar is gaining ground because the Reserve Bank of Australia (RBA) is showing a hawkish attitude, meaning they're inclined to keep interest rates high in 2024. Recent domestic inflation data exceeding expectations has fueled speculation that the RBA might delay any rate cuts. ANZ predicts the RBA could begin reducing rates in November due to the inflation data.
On the data front, Australia's Trade Balance in April showed a surplus of 5,024 million, below the expected increase to 7,370 million from the previous 7,370 million. Building Permits also fell short, rising by 1.9% in March instead of the expected 3.0%. February's reading was -1.9%, indicating a slight improvement in construction activity.
Therefore, the hawkish stance of the RBA, fueled by strong inflation data, supports the AUD. However, weaker-than-expected trade balance and building permits data may slightly dampen the AUD/USD pair's momentum.
Impact of US Federal Reserve's Dovish Stance and Economic Data on AUD/USD Pair
On the US front, the US dollar is facing pressure after Federal Reserve Chairman Jerome Powell's comments following Wednesday's interest rate decision. Powell indicated that there's little chance of another rate hike, adding to the USD's downward pressure. As anticipated, the US Federal Reserve (Fed) chose to keep interest rates steady at 5.25%-5.50% in May.
Powell also noted a slowdown in progress on inflation, suggesting it will take longer than expected for inflation to reach the Fed's 2% target. He mentioned that if strong job growth continues but inflation remains low, it would justify delaying rate hikes.
On the data front, the ADP US Employment Change showed that private businesses added 192,000 workers to their payrolls in April, exceeding the expected increase of 175,000 and the previous month's 208,000.
However, the ISM US Manufacturing PMI dropped to 49.2 in April from March's 50.3, contrary to expectations of remaining steady. This indicates a contraction in the US manufacturing sector, failing to maintain the growth observed in the previous month, which marked the first expansion in 16 months.
Therefore, the dovish stance of the US Federal Reserve and mixed economic data from the US, with strong job growth but a contraction in manufacturing, could support the AUD/USD pair's upward movement.
AUD/USD - Technical Analysis
The Australian Dollar (AUD) against the US Dollar (USD) shows a modest uptick in today's trading session, with a price increase to $0.65449, marking a rise of 0.29%. This positive movement highlights a rebound from previous sessions and positions the currency pair near critical technical levels.
The pivot point for today is set at $0.65167, serving as a baseline for intraday fluctuations. Resistance levels for the AUD/USD are identified at $0.65806, $0.66292, and $0.66878. These are key thresholds where the currency pair might face selling pressure.
On the downside, immediate support lies at $0.64669. Further support levels are established at $0.64110 and $0.63642, which could stabilize price drops.
Technical indicators provide additional insights; the Relative Strength Index (RSI) is currently at 60, indicating a slight tilt towards overbought conditions but still within a normal range. The 50-day Exponential Moving Average (EMA) at $0.65047 supports the bullish sentiment, as it lies below the current price, suggesting an upward trend.
Given these observations, a strategic approach for traders would be to look for entry opportunities above the pivot point. Specifically, initiating a buy above $0.65154 could be prudent, with a take profit target at $0.65811 and a stop loss set at $0.64785 to manage risks effectively.
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Gold Price Analysis – May 01, 2024
Daily Price Outlook
Despite the renewed strength of US dollar. the price of Gold (XAU/USD) gained positive traction and edged higher around the $2,288.39 level, hitting an intraday high of $2,293.24. The upward rally can be linked to multiple factors, including increasing geopolitical tensions, which tend to underpin the safe-haven gold price.
Furthermore, the upticks in the gold price were bolstered by continued gold buying by China. China, the biggest gold buyer, has been steadily purchasing gold since October 2022, marking the longest streak since 2000. This has contributed to upward pressure on gold prices globally.
In contrast, the hawkish Fed stance and bullish US dollar were key factors limiting additional gains in gold prices. Investors are feeling uncertain or hesitant due to upcoming decisions by the Federal Reserve regarding monetary policy.
They are closely watching upcoming economic indicators such as the US ISM Manufacturing PMI (Purchasing Managers' Index) and ADP Employment Change to gauge the health of the economy.
US Dollar Strength and Potential Impact on Gold Prices
On the US front, the broad-based US dollar prolonged its bullish rally and continues to show strength ahead of the US Federal Reserve (Fed) policy meeting. This rally was fueled by US bond yields surging after higher-than-expected Employment Cost Index data.
Furthermore, hawkish remarks from Fed officials, indicating no immediate need for rate cuts, supported the US dollar and could limit gains in the gold price.
Investors will closely watch the press conference following the Fed meeting for guidance. Therefore, a hawkish tone from the Fed could strengthen the US dollar and limit additional gains in precious metals.
China's Gold Purchases and Impact on Gold Prices
On the China front, the world's leading gold consumer has been steadily buying gold since October 2022, marking its longest accumulation of the precious metal since at least 2000. This consistent buying trend is likely to support further increases in the price of gold.
China's actions indicate a strategic move to increase its gold reserves, which could be driven by various factors, including economic stability and long-term investment strategies. Therefore, this continuous gold purchases by China are closely watched by market participants and are expected to have a positive impact on the overall demand and price of gold.
Geopolitical Tensions in Gaza and Impact on Precious Metal Prices
On the geopolitical front, the tensions in the middle east did not show any sign of slowing down and escalated further as Israeli Prime Minister Benjamin Netanyahu announces plans for Israeli forces to enter Gaza's southern city of Rafah, despite a ceasefire deal with Hamas.
Meanwhile, UN chief Guterres expresses dissatisfaction with the slow progress on Gaza aid, urging Israel to prioritize the safety of humanitarian workers and facilitate urgent aid delivery to the enclave.
As per the latest figures, the death toll from Israeli attacks on Gaza since October 7 has surpassed 34,000 Palestinians killed and nearly 78,000 wounded.
Therefore, the ongoing geopolitical tensions, particularly in Gaza, boosted the gold price as investors tend to turn to safe-haven assets such as precious metals during times of uncertainty, driving up demand and causing gold prices to rise.
GOLD (XAU/USD) - Technical Analysis
As of today, the price of gold stands at $2286.275, showing no change from the previous session. The precious metal is trading just below a pivotal mark at $2293, suggesting a tentative stance among investors as they navigate through various economic indicators and geopolitical tensions.
The immediate resistance for gold is observed at $2313, with further resistance levels marked at $2330 and $2353. These thresholds are critical if gold is to regain its upward momentum. Conversely, support levels are established at $2277, followed by $2257 and $2233. These points could provide a cushion should gold face downward pressure.
Technical indicators lend a nuanced view of the current market conditions. The Relative Strength Index (RSI) is currently at 30, indicating that gold might be in oversold territory, which typically precedes a potential reversal or at least some corrective upward movement. Meanwhile, the 50-Day Exponential Moving Average (EMA) stands at $2332, which gold has been unable to reclaim, reinforcing the significance of these resistance levels.
Given the strategic setup, a cautious approach might be advisable. Investors should consider a sell limit order at $2300, targeting a take profit at $2278, with a stop loss set at $2315.
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GBP/USD Price Analysis – May 01, 2024
Daily Price Outlook
The GBP/USD currency pair has continued its downward trend, remaining well offered around the 1.2486 level and hitting an intra-day low of 1.2466. However, this downward movement can be attributed to several factors, including a bullish US dollar and the BOE's dovish stance on interest rates.
As the US Dollar strengthens ahead of the announcement, investors tend to favor the greenback over other currencies, including the British Pound. The Fed's decision to maintain interest rates steady and its hawkish stance contribute to the dollar's appeal, leading to a decline in the GBP/USD pair.
Moreover, economic indicators from the United States, such as the Consumer Price Index (CPI) and the Employment Cost Index, have shown stronger-than-expected performance. This suggests robust economic activity and reinforces expectations of higher interest rates, further bolstering the US Dollar and putting pressure on the Pound Sterling.
Furthermore, the downtrend in the currency pair was bolstered by speculation surrounding potential rate cuts by the Bank of England (BoE). This speculation, driven by various economic factors, significantly impacts the GBP/USD currency pair.
US Dollar Strengthens Ahead of Fed Policy Decision
On the US front, the broad-based US dollar prolonged its bullish rally and continues to show strength ahead of the US Federal Reserve (Fed) policy meeting. This rally was fueled by hawkish remarks from Fed officials, indicating no immediate need for rate cuts. Moreover, positive economic indicators from the United States, such as the higher-than-expected CPI and Employment Cost Index, contribute to the Dollar's strength.
These indicators show strong economic performance and reinforce the idea of higher interest rates in the future, further bolstering the US Dollar.
Speculation for BoE Rate Cuts Exert Pressure on Pound Sterling
On the BOE front, the downtrend in the pair was further bolstered by speculation surrounding potential rate cuts by the Bank of England (BoE). Traders and investors are closely monitoring statements from BoE officials and economic data releases to gauge the likelihood of future interest rate adjustments.
The anticipation of rate cuts, particularly in the upcoming June or August meetings, exerts downward pressure on the Pound Sterling against the US Dollar. BoE Governor Andrew Bailey's confidence in headline inflation returning to the 2% target in April further fuels expectations for monetary policy easing.
As the UK considers lowering borrowing costs, the Pound becomes less attractive compared to the US Dollar. This anticipation of BoE rate cuts contributes to the bearish performance of the GBP/USD pair, with investors adjusting their positions accordingly in response to shifting monetary policy expectations.
GBP/USD - Technical Analysis
Today, the GBP/USD pair is trading slightly lower at $1.24878, marking a decline of 0.06%. Positioned just below the pivot point of $1.25181, the pair shows tentative trading behavior amidst broader market fluctuations. Key technical levels delineate the immediate future course for the pound against the dollar.
Immediate resistance for the GBP/USD is noted at $1.25238, with subsequent barriers at $1.25795 and $1.26377. These levels must be breached to signal any substantial bullish momentum. Conversely, the support framework begins significantly lower at $1.23929, followed by further cushions at $1.23369 and $1.23006. These will be crucial if the pair undergoes further pullbacks.
The Relative Strength Index (RSI) is presently at 46, which points to a near-neutral market sentiment, suggesting that the currency pair is neither overbought nor oversold. Meanwhile, the 50-Day Exponential Moving Average (EMA) at $1.24612 supports the pair just below the current price, indicating that there might be a potential for upward correction provided the market conditions stabilize.
Considering the current market setup, it may be prudent to initiate a cautious buying position. Suggested trading strategy includes placing a buy order above $1.24598, aiming for a take profit at the pivot point of $1.25181, and setting a stop loss at $1.24096 to mitigate potential downside risks.
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EUR/USD Price Analysis – May 01, 2024
Daily Price Outlook
Despite previously released upbeat Eurozone data, the EUR/USD currency pair failed to gain positive momentum and remained bearish around the 1.0663 level, hitting an intraday low of 1.0649.
However, the declining streak can be attributed to multiple factors, including a bullish US dollar and a dovish stance from the European Central Bank (ECB) regarding interest rate cuts. In contrast, Eurozone GDP growth surpassed forecasts, increasing by 0.3% in Q1.
This indicates stronger-than-anticipated economic expansion within the Eurozone during the period, which was seen as one of the key factors helping the EUR/USD pair to limit its downward trend.
US Dollar Strengthens on Upbeat Economic Data and Hawkish Fed Comments
On the US front, the broad-based US dollar gained traction on the back of better-than-expected Employment Cost Index data. Furthermore, the upticks in the US dollar were further bolstered by the comments from Fed officials, suggesting no urgent need for rate cuts.
On the data front, the US Employment Cost Index rose by 1.2%, marking its biggest increase in a year, surpassing both the expected 1.0% and the previous 0.9%. This indicates that the persisting wage pressures might intensify the impact of ongoing inflation in the US economy.
Therefore, the US dollar gained strength against the Euro due to positive US data and hawkish Fed comments. Moving ahead, traders are expected to closely watch the release of the ADP Employment Change and ISM Manufacturing PMI from the US on Wednesday, just before the Fed's Monetary Policy Statement.
Eurozone Economic Indicators Support Potential Euro Strength
On the EUR front, Eurozone GDP grew by a better-than-expected 0.3% in Q1. Furthermore, the Harmonized Index of Consumer Prices (HICP) saw steady year-over-year growth, meeting forecasts, while core HICP, excluding food and energy prices, softened but still surpassed estimates.
However, the Eurozone's stronger-than-expected Q1 GDP growth and steady HICP inflation figures, despite a slight softening in core HICP, could bolster the euro against the US dollar.
Hence, the Eurozone's robust Q1 GDP growth and steady inflation figures could strengthen the euro against the US dollar, driving the EUR/USD pair higher.
EUR/USD - Technical Analysis
In today's session, the EUR/USD pair is slightly down, trading at $1.06630, a decrease of 0.04%. This minor downtick reflects a cautious market posture ahead of key economic releases. Positioned just below its pivotal point at $1.06871, the pair’s movements suggest a hovering uncertainty among traders.
Resistance for EUR/USD is initially found at $1.06889, with further ceilings at $1.07204 and $1.07534 that need to be surpassed for significant bullish momentum. On the downside, the immediate support lies at $1.06322, extending to $1.06018 and $1.05627, which serve as crucial buffers against potential declines.
The Relative Strength Index (RSI) stands at 39, indicating a slight lean towards oversold conditions, which could foretell a potential for recovery if market conditions permit. Additionally, the 50-Day Exponential Moving Average (EMA) aligns closely at $1.06887, underscoring a pivotal role in short-term price direction.
Given the proximity of the current price to critical technical levels, adopting a cautious approach may be wise. An ideal trading strategy would be to initiate a buy position slightly above the current market price at $1.06562, targeting the pivot point at $1.06871 for potential profit-taking, and placing a stop loss at $1.06258 to manage risks effectively.
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GOLD Price Analysis – April 30, 2024
Daily Price Outlook
Gold price (XAU/USD) was unable to prolong its previous day's upward rally and turned bearish around the $2,312.22 level, hitting an intraday low of $2,311.55. However, the downward rally was driven by multiple factors including a bullish US dollar and risk-on market sentiment, which undermined the safe-haven gold price as investors preferred to invest in riskier assets due to upbeat market sentiment. Meanwhile, the bullish US dollar, backed by the growing acceptance that the Federal Reserve (Fed) will keep rates higher for longer, was seen as another key factor that kept the gold price lower.
Impact of US Dollar Strength and Fed Expectations on Gold Prices
On the US front, the broad-based US dollar regained its traction, bouncing back from a two-week low amid expectations that the Federal Reserve will maintain higher interest rates due to persistent inflation. Moving on, the upcoming US Nonfarm Payrolls report is expected to provide insights into the Federal Reserve's future interest rate decisions. This could impact the demand for the US dollar and influence the short-term direction of gold prices.
Furthermore, the release of the US Personal Consumption Expenditures (PCE) Price Index highlighted ongoing inflation concerns, reinforcing expectations that the Fed may delay rate cuts until September. The Federal Reserve's upcoming policy announcement, along with the jobs data released on Friday, will provide clues about their future decisions on monetary policy.
Investors will also keep an eye on Tuesday's US economic indicators, including the Chicago PMI and the Consumer Confidence Index, for further market cues.
Impact of Easing Middle East Tensions on Gold Prices
On the geopolitical front, the easing tensions in the Middle East, particularly between Iran and Israel, are leading to a shift in investor sentiment away from safe-haven assets like gold. However, the recent optimism surrounding peace talks between Israel and Hamas in Cairo, coupled with diminishing fears of further escalation, is bolstering global risk sentiment.
Therefore, the easing tensions in the Middle East and improving geopolitical stability are causing investors to move away from safe-haven assets like gold, leading to an increase in selling pressure and a downward impact on gold prices.
GOLD (XAU/USD) - Technical Analysis
On April 30, gold prices settled at $2,329.48, marking a decline of 0.40%. This adjustment places gold just below the pivotal $2,345 mark, suggesting a tepid sentiment among traders as they navigate through various macroeconomic indicators and market dynamics.
The metal faces immediate resistance at $2,361, with further barriers at $2,383 and $2,403. Should gold manage a breakout above these levels, it could signal renewed investor confidence, potentially driven by macroeconomic uncertainties or shifts in the investment climate. Conversely, the support levels are set at $2,314, $2,291, and $2,268. A breach below these could indicate increasing bearish pressure, possibly influenced by a stronger U.S. dollar or rising real yields.
The 50-Day Exponential Moving Average (EMA) at $2,344 nearly coincides with the current pivot point, underscoring a crucial technical juncture. The Relative Strength Index (RSI) stands at 46, hinting at a lack of strong momentum in either direction but leaning towards bearish territory.
Trading Strategy:
- Given the current technical setup, the strategy would involve a cautious approach:
- Entry Price: Consider initiating a sell position if gold falls below $2,335.
- Take Profit: Set the profit target at $2,314 to capitalize on potential downward moves.
- Stop Loss: Place a stop loss at $2,350 to manage risk effectively.
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USD/CAD Price Analysis – April 30, 2024
Daily Price Outlook
During the European trading session, the USD/CAD currency pair maintained its upward rally and remained well-bid around the 1.3683 level, hitting the intra-day high of 1.3701. The reason for its upward trend could be attributed to the renewed strength of the US Dollar (USD), which provided some support to the pair. However, the US dollar gained traction in the wake of growing acceptance that the Federal Reserve (Fed) will keep rates higher for longer.
Meanwhile, the decline in oil prices was seen as another key factor that kept the USD/CAD pair higher as the Canadian dollar (Loonie) is negatively affected by falling oil prices. Canada's economy relies heavily on oil exports, leading to decreased demand for the currency.
Moving ahead, Investors will keep an eye on the Canadian February Gross Domestic Product (GDP) growth number. The attention will shift to the Federal Open Market Committee's (FOMC) interest rate decision on Wednesday.
Expectation of Higher US Interest Rates Boosts USD/CAD Pair
On the US front, the US dollar gained strength as investors expect the Federal Reserve to keep interest rates high due to ongoing inflation. Fed officials, like Michelle Bowman and Neel Kashkari, don't see the need to lower rates and even suggest the possibility of no rate cuts this year. Some, like Raphael Bostic, might even consider raising rates if inflation worsens. This expectation of higher rates supports the USD, benefiting the USD/CAD pair.
The upcoming FOMC meeting is expected to maintain current rates, with investors watching for any hawkish signals in the statement and press conference, which could strengthen the US dollar further.
Therefore, the expectation of higher US interest rates due to inflation has strengthened the US dollar, benefiting the USD/CAD pair. This trend may continue if the FOMC maintains a hawkish stance.
Bank of Canada Policy Rate and Oil Prices: Impact on USD/CAD
On the Canadian front, traders anticipate that the Bank of Canada (BoC) will likely wait until June or July before considering any cuts to its policy rate. The upcoming February Gross Domestic Product (GDP) data could provide insights into the Canadian economy's performance.
If the report indicates weaker-than-expected data, the BoC might be prompted to consider interest rate cuts sooner, which could weigh on the Canadian dollar (CAD). On the flip side, if the report indicates stronger-than-expected data, the BoC may delay potential interest rate cuts, which could support the Canadian dollar (CAD).
Another factor that has been boosting the USD/CAD pair is the continued decline in oil prices. Canada's economy relies heavily on oil exports, leading to decreased demand for the currency and contributing to the USD/CAD pair's gains.
USD/CAD - Technical Analysis
On April 30, the USD/CAD traded slightly higher at 1.36811, marking an increase of 0.15%. This uptick reflects subtle shifts in market sentiment as traders respond to evolving economic indicators and geopolitical events. The currency pair now hovers just below its critical pivot point at 1.3756, indicating potential volatility in the near term.
The USD/CAD faces immediate resistance at 1.3735, with subsequent thresholds at 1.3788 and 1.3861 that could limit upward movement. Should the pair break through these barriers, it may signal strengthening momentum for the U.S. dollar against the Canadian dollar, influenced by diverging economic policies or shifts in commodity prices, particularly oil, a significant export for Canada. Conversely, the support levels are established at 1.3614, 1.3562, and 1.3516. A decline below these points could suggest growing bearish pressure, potentially due to stronger Canadian economic performance or higher crude oil prices.
Technical indicators such as the Relative Strength Index (RSI) at 52 and the 50-Day Exponential Moving Average (EMA) at 1.3701 offer additional insights. The RSI indicates a neutral momentum, suggesting that the pair is neither overbought nor oversold, while the EMA provides a benchmark for the currency’s current resistance level.
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AUD/USD Price Analysis – April 30, 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 0.6532, hitting the intraday low of 0.6514 level. However, the downticks in the AUD/USD pair were driven by the release of softer Retail Sales data on Tuesday. The pair lost traction right after the release of lower-than-expected domestic Retail Sales data as weak retail sales suggest subdued consumer spending and slower economic growth, leading the Reserve Bank of Australia to maintain or even lower interest rates to stimulate economic activity, a dovish stance.
Moreover, the broad-based US dollar gained bullish traction on the back of expectations that the Federal Reserve will maintain higher interest rates due to persistent inflation. This bullish US dollar was seen as another key factor that kept the AUD/USD currency pair lower.
Australian Retail Sales Data and Chinese Economic Indicators: Impact on AUD/USD Pair
On the data front, Australian Retail Sales dropped by 0.4% in March, missing expectations for a 0.2% increase and reversing the previous month's 0.3% growth. This disappointed investors, leading to a decline in the Australian Dollar. However, the Australian Dollar might recover as recent inflation data exceeded expectations, hinting that the RBA could postpone rate cuts. Commonwealth Bank also revised its forecast, now expecting the first rate cut in November instead of earlier, which could support the Aussie.
Thus, the decline in Australian Retail Sales pressured the AUD/USD pair initially, but positive inflation data and revised rate cut forecasts from Commonwealth Bank may support the Aussie in the near term.
On the China front, the NBS Manufacturing Purchasing Managers Index (PMI) fell to 50.4, down from 50.8, though slightly better than expected. The Non-manufacturing PMI also dropped to 51.2, matching expectations. The IMF's recent report predicts a slowdown in China's economic growth, forecasting rates of 5.2% in 2023, 4.6% in 2024, and 4.1% in 2025.
Hence, the weaker Chinese economic data and IMF's growth forecast could weigh on the AUD/USD pair due to Australia's export reliance on China, potentially leading to reduced demand for the Australian Dollar.
Impact of Hawkish Fed Comments on AUD/USD Pair
On the US front, the broad-based US dollar has been gaining momentum due to hawkish comments from US Federal Reserve officials, suggesting no immediate rate cuts. The CME FedWatch Tool shows an 88.4% probability of the Fed maintaining interest rates in June, up from 83.5% last week. This stance of higher rates for a longer period is bolstering the US Dollar and posing a challenge for the AUD/USD pair.
Fed Chair Jerome Powell stated that it could take longer than expected to reach the 2% inflation target, indicating a prolonged high-rate environment. Fed officials like Michelle Bowman and Neel Kashkari have also hinted at potential upside inflation risks and the possibility of no rate cuts this year, respectively.
Therefore, the strengthening US dollar, fueled by hawkish Fed comments and increased probability of unchanged rates, poses challenges for the AUD/USD pair, with prolonged high-rate expectations and potential inflation risks influencing market sentiment.
AUD/USD - Technical Analysis
On April 30, the Australian Dollar (AUD/USD) closed at $0.65315, marking a decline of 0.49%. This downturn reflects a broader trend of caution in the forex markets, influenced by economic uncertainties and fluctuating risk appetites globally. Trading below the pivotal point of $0.65689, the AUD/USD is situated in a precarious position, suggesting potential further weakness. Resistance is set at higher thresholds of $0.66054, $0.66434, and $0.66878, which need to be surpassed to signal a shift towards a bullish outlook. Conversely, support levels are firmly established at $0.64849, $0.64425, and $0.64103, providing potential stopping points for further declines.
The currency pair’s technical indicators provide additional insight into its current dynamics. The 50-Day Exponential Moving Average (EMA), at $0.64853, lies just below the current trading price, indicating a near support zone that could stabilize further price drops. The Relative Strength Index (RSI) at 51 suggests a neutral momentum, pointing neither to overbought nor oversold conditions, which indicates that the currency could sway in either direction based on upcoming economic data and market sentiment.
Entry Price: Sell below $0.65598 if the AUD/USD continues to show weakness. Take Profit: Target a take profit at $0.65034 to capture potential downward movement. Stop Loss: Set a stop loss at $0.66054 to limit risks against unexpected bullish reversals.
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GBP/USD Price Analysis – April 29, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair has been maintaining a positive trend and remained well bid around 1.2538, hitting the intraday high of 1.2549 level. However, the reason for its upward rally can be attributed to the weaker US Dollar, which lost its traction on the back of risk-on market sentiment. Investors are closely eyeing the upcoming Federal Open Market Committee (FOMC) interest rate decision and press conference scheduled for Wednesday.
Although, the losses in the US dollar could be short-lived as the US Federal Reserve (Fed) is widely expected to maintain the interest rate within its current range of 0.25%–0.5% during this week's meeting. Despite the strength of the US economy and the recent uptick in inflation, speculations suggest that the first rate cut might not occur until September.
US Dollar Weakness and Fed's Hawkish Stance:
Despite the Federal Reserve's hawkish stance on interest rates, the US Dollar is witnessing a decline and remains subdued amid positive market sentiment. Investors anticipate the Fed to maintain rates steady between 5.25% and 5.5%. Although the US economy exhibits strength, concerns over rising inflation have delayed expectations for rate cuts until September. Recent data from the US Bureau of Economic Analysis, showing a higher-than-expected increase in the Core PCE Price Index, further bolstered the Fed's hawkish expectations.
On the data front, the US Bureau of Economic Analysis reported on Friday that the Personal Consumption Expenditures (PCE) Price Index rose 0.3% in March, exceeding expectations for a reading of 2.6%. The yearly rate also climbed to 2.7% from 2.5% in February. Meanwhile, the core PCE Price Index, which excludes volatile food and energy prices, remained steady at 2.8%, higher than the anticipated 2.6%. These results reinforced the Federal Reserve's hawkish expectations and helps US dollar to limit its losses.
BoE Expected Rate Cuts and Impact on GBP/USD:
On the UK front, investors are starting to believe that the Bank of England (BoE) might lower interest rates at its June meeting. BoE Governor Andrew Bailey hinted that two or three rate cuts this year could happen, which made people think this way. If the BoE decides to cut rates, it could make the Pound Sterling weaker. However, the dovish shift in BoE's monetary policy stance could weaken the Pound Sterling (GBP) and cap further gains in the GBP/USD pair.
GBP/USD - Technical Analysis
In today’s trading session, the GBP/USD pair has appreciated notably, climbing by 0.43% to reach a current level of 1.25423. This movement places the currency pair just above a pivotal technical juncture observed on the 4-hour chart.
The pivot point for today is established at 1.25151. Holding above this level could serve as a springboard for GBP/USD, targeting the first immediate resistance at 1.25795. Should bullish momentum persist, further resistances are projected at 1.26377 and 1.27034, respectively. On the flip side, should the pair lose ground, it would first encounter support at 1.24498, with more substantial floors awaiting at 1.23929 and 1.23369 if the downtrend accelerates.
The technical indicators suggest a solidifying bullish bias; the Relative Strength Index (RSI) stands at 63, indicating growing momentum but still shy of the overbought territory. Furthermore, the 50-Day Exponential Moving Average (EMA) at 1.2470 now acts as a support level, reinforcing the upward trajectory since it resides below the current price.
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EUR/USD Price Analysis – April 29, 2024
Daily Price Outlook
The EUR/USD pair has maintained its upward rally and remained well-bid around the 1.0715 level, hitting the intraday high of 1.0734. However, this positive performance was driven by the weakening US dollar, which failed to gain traction despite the Fed's hawkish stance amid a risk-on market sentiment. Meanwhile, investors await key economic indicators from the Eurozone, which make investors hesitate to place a strong bid.
US Dollar Weighed Down by Economic Uncertainty, Supporting EUR/USD Pair
On the other hand, the broad-based US dollar remains under pressure due to uncertainty surrounding the US economic outlook. However, weak preliminary US economic indicators, such as the S&P Global Purchasing Managers’ Index survey for April and Q1 GDP data, have raised concerns about the economy's ability to withstand higher interest rates by the US Federal Reserve (Fed). The uncertainty surrounding the US economic outlook has kept the US Dollar under pressure.
Hence, the weak economic indicators raise concerns about the economy's resilience against potential interest rate hikes, benefiting the EUR/USD pair.
Eurozone Economic Data and ECB Speculation Impacting EUR/USD Pair
Looking forward, the upcoming release of key economic data from the Eurozone, including the preliminary Eurozone Q1 Gross Domestic Product (GDP) and the Consumer Price Index (CPI) data for April, is expected to influence speculation about interest rate cuts by the European Central Bank (ECB). However, investors increasingly anticipate that the European Central Bank (ECB) will begin reducing interest rates at its June meeting, as policymakers consider this action to be sensible.
Therefore, the anticipation of interest rate cuts by the ECB based on upcoming economic data may weaken the Euro against the US Dollar as investors adjust their positions in response to potential policy changes.
EUR/USD - Technical Analysis
Today, the EUR/USD pair has shown notable strength, registering a gain of 0.35%, and trading at 1.07288. This upward movement comes as the currency pair tests key technical levels on a 4-hour chart. Currently, EUR/USD hovers slightly above the pivot point of 1.07082, suggesting a possible continuation of the bullish trend if it maintains this momentum.
If the pair sustains above the pivot point, the immediate resistance at 1.07534 could be the next target. Breaching this level might open the path towards higher resistance levels at 1.07777 and 1.08088. Conversely, if the pair reverses its gains, it could find support at 1.06783. Further declines might test subsequent support levels at 1.06431 and 1.06090, marking critical zones that could halt a downward trajectory.
The technical indicators reinforce the bullish outlook, with the Relative Strength Index (RSI) at 57 indicating a slight bullish momentum without venturing into overbought territory. The 50-Day Exponential Moving Average (EMA) sits just below the current price at 1.07043, further supporting the potential for upward movement.
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