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Created on September 24, 2024

• I believe that the EUR/GBP pair is worth watching due to the fact that we have absolutely collapsed at this point, and it looks like the market is likely to continue to see traders favor the British pound over the euro.
• The 0.84 level has been an area that a lot of people paid close attention to previously, and the fact that we have now sliced through it rather handily suggests that this pair has much further to go to the downside.

Furthermore, it’s probably worth noting that the Bank of England chose to stand still as far as interest rates are concerned, and this is an obvious reaction to that. In general, this is a market that I think is going to start looking to the 0.83 level, which is a large, round, psychologically significant figure and an area that we have seen a lot of buyers in previously. If we break down through there, then it’s likely that they absolute floor will fall apart, and we could see the EUR/GBP market just dropped drastically.

Looking at this chart

Looking at this chart, there’s absolutely nothing positive on it, with perhaps the lone exception of the 0.83 level being an area that some people may be looking for to bounce. However, we would have to break above the 50 Day EMA in order to see some type of turnaround and a push to the upside that allows the market to go looking to the 200 Day EMA. Ultimately, I think this is a market that is in freefall, and it is very likely that we will continue to see a lot of money flow out of the EUR and into the GBP. In general, I think this is a situation that will continue to see a lot of questions asked about the overall attitude of risk appetite and of course the idea of whether or not we are going to see the European Union finally turn around and strengthen, or if the fact that the ECB has cut a couple of times in the BOE hasn’t bothered continue to push this market around

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Created on September 24, 2024

• On Monday, the Japanese yen declined to over 144.40 yen against the US dollar in thin trading, continuing losses incurred last week amid concerns that the Bank of Japan is in no hurry to raise interest rates.
• Last week, the yen lost more than 2% as the Bank of Japan kept its interest rate unchanged at 0.25% in a unanimous vote, in line with expectations.
• At the same time, Bank of Japan Governor Kazuo Ueda acknowledged “some weakness” in the economy during his post-meeting press conference, a slightly more dovish tone than previous statements.

According to Forex trading, his comments weakened the prospects of a rate hike in October, although one is still expected in December. However, Ueda maintained his forecast that the economy is steadily progressing towards a modest recovery, affirming that the central bank “will continue to adjust the degree of easing” if its economic and price forecasts are realized.

Externally, the yen faced pressure from rising risk assets after the Federal Reserve’s large interest rate cut boosted global economic expectations.

According to stock trading platforms, the Standard & Poor’s 500 and Dow Jones rose to new record highs. According to performance, the Standard & Poor’s 500 rose 0.3%. Also, the Dow Jones rose 0.1%, both hitting new record highs at the start of the week after last week’s rally that was spurred by the Federal Reserve’s first interest rate cut in four years, which was set at 50 basis points.

Also, the Nasdaq rose 0.1%. Investors closely evaluated the comments of several policymakers to understand the rationale behind the Fed’s large 50 basis point interest rate cut. Fed officials including Raphael Boucek, Neel Kashkari and Austan Goolsbee have expressed support for the latest cut and indicated their preference for additional rate cuts in the coming months.

Among the stock performers, Intel shares jumped 3.4% after reports of a potential multi-billion-dollar investment from Apollo Global Management. Tesla shares rose 4.9% as investors looked ahead to the launch of its long-awaited robotaxi and upcoming third-quarter sales figures.

On the economic data front, concerns about economic growth persist, as US manufacturing data reached a 15-month low and Labor market indicators showed signs of weakness.

USD/JPY Technical Analysis and Expectations Today:

My technical outlook for the USD/JPY pair remains unchanged. Despite its recent gains, the overall trend remains bearish, and the proximity to the psychological support level of 140.00 still confirms the bears’ control of the trend. According to the daily chart attached, a reversal of the overall trend to bullish will not occur without moving towards resistance levels of 147.90 and 150.00, respectively. As mentioned earlier, the USD/JPY price will remain subject to signals from global central bank officials regarding the future of tightening or easing. Also, investor risk appetite, in addition to awaiting the US Federal Reserve’s preferred US inflation reading at the end of the week.

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Created on September 24, 2024

• At the start of this week, the Euro fell to $1.11, below its recent peak in July 2023 earlier this month, amid concerns that the European Central Bank may need to accelerate its easing efforts to support the struggling economy.
• Preliminary Purchasing Managers’ Indices for the Eurozone, Germany, and France were disappointing and showed a return of the Eurozone’s private sector activity to contraction, as the end of the Olympic Games affected the French services sector and problems in German automakers like Volkswagen caused a further decline in the manufacturing sector.

Overall, investors are now betting on around 44 basis points in additional interest rate cuts by the ECB this year, with a 40% probability of a cut in October. The central bank cut interest rates by 25 basis points for the second time this year in September, and hinted at further cuts in the future due to slowing inflation and weak economic growth in the Eurozone.

What is expected for the EUR/USD in the coming days?

The EUR/USD exchange rate could rise, and analysts believe that the resistance level of 1.12 is an attractive target in the near term. Generally, the recent gains made by the Euro against the US Dollar are due to developments in the United States, where the massive 50 basis point US interest rate cut by the Federal Reserve last week ignited a new wave of dollar weakness.

We are noticing signs of over-extension in the exchange rates of many US dollars, and we wonder whether the US dollar is due for a comeback in the coming days as recent moves consolidate. This was the risk we see in the GBP/USD pair, and any decline there is likely to reflect weakness in the main EUR/USD pair.

Technically, there is only one level ahead that matters: the resistance level of 1.12. This is the level where the previous EUR/USD rallies that lasted for several weeks in August 2024 and mid-2023 failed. According to the forecast, the EUR/USD pair looks set to test the resistance level at 1.1202, its recent high, if the US dollar continues to slow as we expect. A test of the 1.12 resistance level seems likely, but whether it will happen this week is another matter. As we have already mentioned, the recent weakness in the US dollar seems overdone, and some neutrality may be in order.

In general, in the Eurozone, the forex markets will be watching the September PMI survey on Monday, as well as the German IFO survey, due out on Tuesday. However, the impact of these data will be short-lived as recent weeks have consistently confirmed that the dollar and the US Federal Reserve’s policy are the only options available.

For this reason, we will continue to focus on the existing risks in the United States in the coming days; the core personal consumption expenditure figures, which will be released on Friday, will be the Federal Reserve’s preferred measure of inflation. Meanwhile, financial markets expect US inflation to rise by 0.1 percentage point to 2.7% year-on-year in August. Rising inflation conflicts with expectations of a generous flow of interest rate cuts by the Federal Reserve from now until late 2025, and if the market wakes up to this clear contradiction, the dollar could recover.

Initially, Monitor the different policymakers at the Federal Reserve who are scheduled to give speeches this week. Thus, any cautionary voices about the pace of future cuts could give the market a reason to rebalance to a lower level of euphoria that prevailed last week.

EUR/USD Technical analysis and forecast:

According to the performance on the daily chart attached, EUR/USD bulls are trying to break the psychological resistance barrier of 1.1200 to confirm control. Thus, the pair prepares to test stronger peaks, in which case technical indicators will move towards strong overbought levels. In the same time frame, as we mentioned before, the support levels of 1.1075 and 1.0885 will remain the most important to confirm the general trend turning to the downside. Today, the euro will be affected by the announcement of the German IFO reading and the dollar will be affected by the announcement of the US consumer confidence reading.

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Created on September 24, 2024

• The British pound initially pulled back a bit against the US dollar during the early hours on Monday, but you’ve seen traders come in and start buying the pound right at the 1.3250 region.
• Now as we look at this, it looks like the market is ready to continue going quite a bit higher.
• Ultimately, it looks like the 1.35 level above could be a bit of a target, when you look at longer term charts, short term pullbacks at this point in time continue to attract attention from everything I see.

It does make a certain amount of sense because Wall Street, specifically the Americans are celebrating the idea of a falling US dollar due to the Federal Reserve and cutting interest rates by 50 basis points last week.

Bank of England

The Bank of England on the other hand has not cut and therefore it shows that it has a bit more resiliency and I think that’s something that must be kept in the back of your mind as well. In fact, the British pound might be one of the better performing currencies out of the G10 that I follow due to central bank policy being much more hawkish than many others. The market is dropping from here, but will find plenty of support at multiple spots, but I believe the 1.30 level is really the floor in the market at the moment. If we can break above the 1.35 level, then I do believe that the British pound continues to go higher, and I think it probably could happen. We are a little bit stretched at the moment, but the way we rebounded later in the day does suggest that there are still plenty of people willing to come in and pick up dips.

Ultimately, this is a market that looks very bullish, but that does not necessarily mean that the market is going to fall apart in the short term. In general, do believe that value hunters will continue to be one of the major drivers of this pair, as the central bank divergence will continue to capture a lot of attention.

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Downward trends in consumer confidence could signal reduced spending, supporting a more dovish Fed rate path. Increasing expectations of multiple 2024 Fed rate cuts could push the USD/JPY below 142.5. However, fears of a US hard economic landing could intensify if the Index falls below 100, possibly fueling a flight to safety. Private consumption contributes over 60% to the US economy.

Short-term Forecast for USD/JPY

USD/JPY trends will depend on the services PMI from Japan, US consumer confidence figures, and central bank commentary. Weaker-than-expected PMI numbers and cautious comments from the BoJ Governor could impact Yen demand. Moreover, a modest decline in US consumer confidence may bolster expectations of a soft US landing, supporting a USD/JPY move toward 145.

Investors should remain alert, with economic indicators and central bank commentary to dictate demand for the USD/JPY pair. Monitor real-time data, central bank views, and expert commentary to adjust your trading strategies accordingly. Stay ahead of the market with our expert insights.

USD/JPY Technical Analysis

Daily Chart

The USD/JPY remains well below the 50-day and 200-day EMAs, affirming bearish price signals.

A USD/JPY return to 145 would support a move toward the 145.891 resistance level. Furthermore, a break above the 145.891 resistance level could give the bulls a run at the 50-day EMA.

Services sector PMI figures from Japan, consumer confidence numbers from the US, and central bank commentary require consideration.

Conversely, a fall through the 143.495 support level could signal a drop toward the 141.032 support level.

The 14-day RSI at 46.36 indicates a USD/JPY fall to the 141.032 support level before entering oversold territory.

• USD/JPY falls to 143.45 after reaching a daily high of 144.46, pressured by softer US data fueling Fed rate cut speculation.
• Technical outlook remains bearish, with momentum favoring sellers as the pair fails to clear resistance at 143.81 (Kijun-Sen).
• Key support levels include the Senkou Span A at 142.92 and the Tenkan-Sen at 142.03, with further downside targeting 141.73 and 139.58.

The USD/JPY snapped two days of gains and dropped late in the North American session following softer-than-expected US economic data, fueling rate cut speculation by the Federal Reserve. At the time of writing, the pair trades at 143.45 after hitting a daily high of 144.46.

USD/JPY Price Forecast: Technical outlook

From a technical standpoint, the USD/JPY is downward biased despite printing a leg-up after bouncing from the September 16 low of 139.58 to the September 20 high of 144.49. It should be said that the rally continued to remain capped by the Kijun-Sen at 143.81, opening the door for further losses.

Momentum remains negative, as the Relative Strength Index (RSI) portrays. Therefore, tha path of least resistance is tilted to the downside.

The first support would be the Senkou Span Aat 142.92, followed by the Tenkan-Sen at 142.03, before challenging the September 20 swing low of 141.73. If surpassed, the USD/JPY could aim toward the September 16 pivot low of 139.58.

Conversely, if USD/JPY buyers move in and push prices above 144.00, further upside lies above the September 20 high of 144.49.

USD/JPY Price Action – Daily Chart

Created on September 23, 2024

• The British Pound came under pressure on Friday morning after UK retail sales exceeded expectations.
• However, a disappointing consumer sentiment survey suggests that the government’s pessimistic tone regarding the economy and national finances is having a chilling effect.
• According to Forex trading, the GBP/EUR exchange rate rose to 1.1925, just three points away from its 2024 high, after the Office for National Statistics said UK retail sales volumes rose 1.0% on a monthly basis in August, doubling July’s figure and easily beating forecasts of 0.4% growth.

According to the economic calendar, the annual growth rate rose to 2.5% from 1.5% and beat expectations of 1.4%. Meanwhile, the strong reading justified the Bank of England’s decision on Thursday to adopt a cautious approach to cutting interest rates further and helped the GBP/USD exchange rate extend its march to the 1.3340 resistance.

With the latest figures, future risks lie in declining consumer confidence. The GfK Consumer Confidence survey – the country’s longest-running and most important survey of consumer sentiment – was also released on Friday. The survey reported a significant decline in confidence across all areas, with the main index falling by seven points. Clearly, consumer confidence will be important in determining whether the rise in retail sales can continue. Headwinds include the autumn budget, which could be a gloomy event with the government warning that it will need to raise taxes to improve its financial position.

Overall, the new UK government has been preparing the nation for a tough budget in October that will see tax increases and spending cuts. Messages from Prime Minister Keir Starmer and Chancellor Rachel Reeves have been pessimistic, and economists have warned that the government risks talking the economy down. Commenting on this, Matt Britzman, senior equities analyst at Hargreaves Lansdown, said: “Words matter, and the new government’s continued pessimistic tone about the economy and the upcoming budget could become a self-fulfilling prophecy.

Overall, the Bank of England’s decision to keep interest rates on hold on Thursday will disappoint consumers who had been hoping for lower rates, however, financial markets show that investors fully expect the next rate cut to come in November. Nevertheless, the pound is benefiting from the BoE’s decision to keep rates on hold, and strong retail sales figures are providing a fresh boost to buying interest ahead of the weekend. However, the strong performance could defy a consumer-led economic slowdown.

According to the stock trading platforms, UK shares fell at the end of trading, posting weekly losses. The FTSE 100 index of British shares fell 1.2% to close at 8,230 points on Friday, reversing strong gains the previous day, driven by a large interest rate cut by the Federal Reserve. Traders continued to digest policy decisions taken by central banks this week, including those from the Federal Reserve and the Bank of England, while assessing mixed economic data.

UK retail sales in August exceeded estimates, reaching their highest level in two years, but a survey revealed a sharp decline in consumer confidence for September. Among the biggest losers were shares of Spirax-Sarco Engineering (-4.8%), Frasers Group (-4.5%), and Next (-4%). Also, shares of Burberry fell 3.5% after being removed from the FTSE 100 index and after Jefferies downgraded the stock to “Underperform” from “Hold” and cut the target price to 490 pence from 800 pence. Over the week, the FTSE 100 index fell by 0.5%.

Technical forecasts for the GBP/USD pair today:

With the recent gains in the GBP/USD and the technical indicators on the daily chart moving towards strong overbought levels, the Sterling may face profit-taking. Technically, the nearest resistance levels to the recent performance are 1.3365, 1.3430, and 1.3500, respectively. On the other hand, on the same time frame, the currency pair has moved towards support levels of 1.3150 and 1.3000, which could end the current uptrend. Ultimately, we expect the GBP/USD to stabilize around the current performance until the market reacts to the reading of the US inflation data preferred by the Federal Reserve and statements by several bank officials throughout the week.

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• An unexpected spike in services inflation complicated the outlook for BoE rate cuts.

• Data revealed an unexpected 1% increase in UK retail sales.

• The dollar rebounded against a weak yen on Friday.

The GBP/USD outlook shows a slight shift in sentiment as the pound pulls back from recent highs. The decline comes as the dollar broadly recovers after the Bank of Japan failed to support the market’s hawkish outlook.

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Sterling had a strong rally last week as data reduced bets for Bank of England rate cuts. The first report of the week on Wednesday revealed that inflation held steady at 2.2%. However, there was an unexpected spike in services inflation, complicating the outlook for rate cuts. Policymakers have remained cautious despite low headline inflation figures. Their focus remains on the services sector, where price pressures remain high. 

The second major report came on Friday, showing an unexpected 1% increase in August retail sales. The UK economy has performed better than most expected in recent months. Therefore, the Bank of England has more room to pause before resuming rate cuts. Currently, market participants are pricing a 71% chance of a 25-bps BoE rate cut in November. However, this outlook might keep shifting with incoming data.

Meanwhile, the dollar plunged on Wednesday last week after the Fed implemented an unexpected 50-bps rate cut. It was an aggressive start to an easing cycle that will continue to hurt the greenback. Traders are betting on another such rate cut in November. 

However, the dollar rebounded against a weak yen on Friday after a disappointing BoJ policy meeting. This strength spread across the board, affecting the pound. Still, fundamentals support more upside for GBP/USD.

GBP/USD key events today

• US flash manufacturing PMI
• US flash services PMI

GBP/USD technical outlook: Bullish momentum weakens

On the technical side, the GBP/USD price is retreating after failing to sustain a move above the 1.3301 resistance level. Nevertheless, the bias is still bullish because the price trades above the 30-SMA, with the RSI above 50. 

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GBP/USD has maintained a bullish trend since the price broke above the 30-SMA. It has made consistent higher highs and lows. However, the RSI has made a slight bearish divergence, indicating weaker momentum. Furthermore, price action shows bears are gaining strength after making an engulfing candlestick pattern. 

Therefore, the price might soon challenge the SMA. A break below would indicate a reversal. Otherwise, the bullish trend will continue.

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