GBP/JPY Forecast Video for 25.09.23

British Pound vs Japanese Yen Weekly Technical Analysis

The British pound has fallen during the course of the week, which makes sense considering that the Bank of England decided to keep interest rates flat. By doing so, it shows that there is perhaps some concern out there when it comes to the UK economy, and therefore the British pound may struggle a bit. However, the Bank of Japan did the same thing, so I think once the dust settles, it means that we will continue to see a lot of the same behavior. Because of this, I fully anticipate that there will be a “buy on the dips” opportunity, but we may have to test the crucial ¥180 level before we do it.

If we break above the top of the candlestick for the week, then it opens up the possibility of a move toward the ¥185 level. The ¥185 level is an area that I think a lot of people have to pay close attention to, and if we were to break above there, then it’s likely that the market goes much higher, as we continue to see the interest rate differential drive this pair much higher. I have no interest in shorting this pair anytime soon, as the interest rate differential continues to pay you at the end of the session every day. That being said, it doesn’t mean that we will get the occasional pullback, but I think it opens up the possibility of looking at this as a value proposition more than anything else. Alternatively, I do think that we break out to the upside although it may take some time to get there.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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“Exchange-rate fluctuations affect economic activity in various ways. It also affects inflation in a broad-based and sustained way, beyond the direct impact on import prices.”

While intervention threats may cap the upside, the Bank of Japan may need to take a more hawkish stance to begin restoring buyer demand for the Yen.

Can economic indicators from Japan raise investor bets on a July BoJ rate hike?

Retail Sales and Tokyo Inflation: Crucial Data Releases for the BoJ

On Thursday, June 27, retail sales figures from Japan could influence investor expectations of a July BoJ rate hike. Economists forecast retail sales to increase 2.0% year-on-year in May after a rise of 2.4% in April.

Investors could take better-than-expected numbers as a cue for the BoJ to consider raising rates in July. Upward trends in consumer spending could fuel demand-driven inflation.

However, labor market data and inflation numbers for Tokyo (Fri) could affect sentiment toward the BoJ rate path more.

Economists forecast the Tokyo core annual inflation rate to rise from 1.9% to 2.0% in June. Furthermore, economists expect the annual inflation rate to increase from 2.2% to 2.4%.

Hotter-than-expected numbers and a steady unemployment rate could greenlight a July BoJ rate hike.

The BoJ could justify a market-influencing move by highlighting the effects of the weaker Yen on the Japanese economy.

While economic indicators from Japan will influence the USD/JPY, US data could affect views that interest rate differentials have peaked.

US Housing Market Data and the Fed Rate Path

Investors will turn their attention to US housing sector data later in the Wednesday session.

Analysts predict a 2.9% rise in US new home sales for May, following a 4.7% decline in April. Market participants should be mindful of trends, as new home inventories can cause fluctuations. Rising inventory trends might alleviate price pressures and reduce costs for housing services, including rents. Housing services inflation contributes to headline inflation.

Furthermore, upward trends in new home demand could indicate strong consumer confidence. Increased consumer confidence might boost consumer spending and bolster expectations of a US soft landing.

• The British pound initially fell off a bit during the early hours on Monday but turned around and show signs of strength to reach above the ¥202 level by the time New York got involved.
• Quite frankly, this is a market that continues to see a lot of upward momentum, and it should considering that the Bank of Japan has absolutely no chance of raising interest rates anytime soon, and the interest rate differential continues to pay you at the end of every session.

Technical Analysis

This is a pair that is obviously very bullish, and therefore I think you need to pay close attention to the idea of any pullback being a potential buying opportunity. The ¥200 level underneath is a major support level based on both psychology and of course the fact that it previously had been massive resistance. Furthermore, the Bank of Japan had intervened in that general vicinity, and the fact that we are above it does suggest that we have much further to go over the longer term. The 50-Day EMA is currently sitting at the 197.60 level and is rising. In other words, there is absolutely nothing on this chart that looks even remotely close to being bearish.

The plan going forward

At this point, anytime this pair drops 100 pips, I’m a buyer. I don’t really need to think about it much further than that, due to the fact that I will get paid at the end of every session, and this is one of the better paying short-yen trades that I have on at the moment. Quite frankly, it’s a bit boring but trading doesn’t necessarily have to be overly exciting, as this is more or less an investment.

The one thing that I do pay close attention to is whether or not the Bank of England looks likely to start aggressively cutting rates. At this point, it doesn’t look like they’re going to do so very aggressively, so there’s really not a whole lot to do here other than to add to the position every time I get a chance to, and to simply hang on and get as much out of this trend as is humanly possible.

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GBP/USD Forecast Video for 25.08.23

British Pound vs US Dollar Technical Analysis

In the past 24 hours, we have seen a repeat of the action from the previous 24 hours in the GBP/USD. Both of the PMI indicators have surprisingly slipped into negative territory on Wednesday, leading to a clear shift in investor sentiment toward the US dollar as a safe haven. It’s important to note that the United States’ PMI data is still awaiting release, and if these numbers reflect a similarly grim outlook, the current situation might experience a complete reversal.

At present, the market finds itself in a position between two important technical markers: the 50-Day Exponential Moving Average (EMA) and the 200-Day EMA. This setup alone tends to introduce a fair amount of market volatility and turbulence. In essence, this market continues to be marked by distinct fluctuations, a pattern that is likely to continue given the upcoming Jackson Hole Symposium speech scheduled for Thursday.

This upcoming speech holds significant influence over the market’s direction, with close attention focused on the stance taken by Jerome Powell, the Chair of the Federal Reserve. While a hawkish approach from Powell could potentially strengthen the US dollar, there is a prevalent sense of doubt among market observers. Despite this uncertainty, the prevailing sentiment seems to be one of cautious reservation.

All things considered, the market appears to have settled into a holding pattern, even following a substantial sell-off witnessed early in Thursday’s session. This situation is supported by a major uptrend line, serving as a robust foundational base. As a result, the resilience of this support suggests that a significant push would be needed to breach this market’s defenses. If the market were to dip below the 200-Day EMA, it could potentially trigger a prolonged negative trajectory. Such an occurrence might lead to a significant shift toward the US dollar, impacting not only the British pound but also extending to various currency pairs.

In essence, our interpretation of this situation depends on whether it presents a value-based opportunity or veers toward a market breakdown. The days ahead hold the potential to offer valuable insights into this crucial question. Nonetheless, it’s safe to say that this market will likely face numerous uncertainties as we approach the end of the week – or so.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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Australian Dollar vs US Dollar Technical Analysis

The Australian dollar tried to rally initially during the trading session on Tuesday, but continues to struggle yet again, near the 0.67 level as we are just simply stuck. And with that being said, I think you have to look at this through the prism of a market that’s just going to continue to go back and forth. It will continue to show signs of hesitation to get above 0.67, but it will also show signs of support closer to the 200-day EMA.

The market continues to be very sideways, mainly due to the fact that I think people are still waiting around to see what the Federal Reserve is going to do, and of course, people are not overly sure what to do about commodities and global growth. With that being said, market participants have to deal with a scenario where traders are just going to be short-term focused and that’s fine.

If you are short-term focused, the market has offered a great little area to trade back and forth, but you have to be willing to babysit the charts. If we were to break down below the 200-day EMA, which is just below the 0.66 level, then we could drop down to the 0.6450 level. If we can clear the 0.67 level on a daily close, it could open up a move all the way to the 0.6875 handle. However, right now, it doesn’t seem like we have any momentum one way or the other.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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• EUR/USD gave away part of Monday’s recovery.
• The acceptable bounce in the US Dollar kept the pair under pressure.
• Markets’ attention remains on US PCE due on June 28.

The resurgence of buying interest in the US Dollar (USD) prompted the USD Index (DXY) to recover some of Monday’s retracement, exerting marked pressure on risk-sensitive assets and pushing EUR/USD back below the 1.0700 area on Tuesday.

The sour mood around the single currency came despite dwindling political concerns in Europe, although expectations remained well on the rise ahead of the snap elections on June 30.

There were no changes to the macro scenario on both sides of the Atlantic, with the European Central Bank (ECB) still gauging the possibility of further rate cuts beyond the summer vs. market bets for two more rate cuts in the latter part of the year.

Around the Federal Reserve (Fed), market participants maintained alive the debate between one or two rate reductions this year, despite the Fed already voicing its forecast for just one cut, which is likely to be in December.

Still around the Fed, Governor Michelle Bowman emphasised earlier on Tuesday that holding the policy rate “for some time” will most likely be adequate to keep inflation under control. However, she emphasised her willingness to increase rates if required.

It is worth noting that the CME Group’s FedWatch Tool now indicates nearly a 65% probability of lower interest rates at the September 18 gathering.

In the short term, the recent rate cut by the European Central Bank (ECB), in contrast with the Fed’s decision to maintain rates, has widened the policy gap between the two central banks, potentially leading to further weakness in EUR/USD in the short-term horizon.

However, the Eurozone’s emerging economic recovery and perceived loss of momentum in US fundamentals are expected to reduce this disparity, which could lead to occasional support for the pair in the near term.

EUR/USD daily chart

EUR/USD short-term technical outlook

If the EUR/USD rebound gathers pace, the next target is the 200-day SMA at 1.0789, seconded by the weekly top of 1.0852 (June 12) and the June peak of 1.0916 (June 4). The breakout of this level exposes the March high of 1.0981 (March 8), prior to the weekly high of 1.0998 (January 11) and the important 1.1000 yardstick.

If bears gain control, the pair may initially revisit the June low of 1.0667 (June 14), ahead of the May low of 1.0649 (May 1), and lastly the 2024 bottom of 1.0601 (April 16).

So far, the 4-hour chart has shown some hints of renewed deterioration. The initial resistance occurs at 1.0761, followed by 1.0805 and 1.0852. The first support emerges at 1.0667, followed by 1.0649 and 1.0601. The Relative Strength Index (RSI) has stabilised at approximately 43.

• EUR/USD gave away part of Monday’s recovery.
• The acceptable bounce in the US Dollar kept the pair under pressure.
• Markets’ attention remains on US PCE due on June 28.

The resurgence of buying interest in the US Dollar (USD) prompted the USD Index (DXY) to recover some of Monday’s retracement, exerting marked pressure on risk-sensitive assets and pushing EUR/USD back below the 1.0700 area on Tuesday.

The sour mood around the single currency came despite dwindling political concerns in Europe, although expectations remained well on the rise ahead of the snap elections on June 30.

There were no changes to the macro scenario on both sides of the Atlantic, with the European Central Bank (ECB) still gauging the possibility of further rate cuts beyond the summer vs. market bets for two more rate cuts in the latter part of the year.

Around the Federal Reserve (Fed), market participants maintained alive the debate between one or two rate reductions this year, despite the Fed already voicing its forecast for just one cut, which is likely to be in December.

Still around the Fed, Governor Michelle Bowman emphasised earlier on Tuesday that holding the policy rate “for some time” will most likely be adequate to keep inflation under control. However, she emphasised her willingness to increase rates if required.

It is worth noting that the CME Group’s FedWatch Tool now indicates nearly a 65% probability of lower interest rates at the September 18 gathering.

In the short term, the recent rate cut by the European Central Bank (ECB), in contrast with the Fed’s decision to maintain rates, has widened the policy gap between the two central banks, potentially leading to further weakness in EUR/USD in the short-term horizon.

However, the Eurozone’s emerging economic recovery and perceived loss of momentum in US fundamentals are expected to reduce this disparity, which could lead to occasional support for the pair in the near term.

EUR/USD daily chart

EUR/USD short-term technical outlook

If the EUR/USD rebound gathers pace, the next target is the 200-day SMA at 1.0789, seconded by the weekly top of 1.0852 (June 12) and the June peak of 1.0916 (June 4). The breakout of this level exposes the March high of 1.0981 (March 8), prior to the weekly high of 1.0998 (January 11) and the important 1.1000 yardstick.

If bears gain control, the pair may initially revisit the June low of 1.0667 (June 14), ahead of the May low of 1.0649 (May 1), and lastly the 2024 bottom of 1.0601 (April 16).

So far, the 4-hour chart has shown some hints of renewed deterioration. The initial resistance occurs at 1.0761, followed by 1.0805 and 1.0852. The first support emerges at 1.0667, followed by 1.0649 and 1.0601. The Relative Strength Index (RSI) has stabilised at approximately 43.

GBP/JPY Forecast Video for 06.04.23

British Pound vs Japanese Yen Technical Analysis

The British pound has shown itself to be somewhat soft during the trading session on Wednesday, but that’s to be expected as we are at the top of the major resistance barrier. Furthermore, late during the day on Tuesday, the market sold off quite drastically to form a massive shooting star for the day, so this suggests that perhaps there are still questions out there about what’s going on with the yen.

The British pound was a little overstretch not only against the yen, but against multiple other currencies as well, so it does make a certain amount of sense that we would see this happen. That being said, I’m not looking for some type of major selloff, I think it’s more likely than not going to be a situation where we just pulled back into previous consolidation, trying to sort out the overall attitude of the markets. With that being said, the ¥166 level continues to look like an area of trouble, so I do think that it is probably only a matter of time before we have to challenge that seriously. Underneath, we have the 50-Day EMA crossing above the 200-Day EMA, suggesting that the “golden cross” could attract buyers.

If we do break down below this moving averages, there are plenty of areas where I would expect to see buyers, reaching all the way down to the ¥159.50 level. In other words, this pullback will more likely than not attract buyers, and therefore it should be thought of as an opportunity to pick up a little bit of value in what has been an extraordinarily bullish market for some time.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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• For the second day in a row, the GBP/USD price is trying to rebound higher, but its gains did not exceed the 1.2698 level, which is stable near it at the time of writing the analysis.
• Concurrently, the currency pair is trying to recover from the losses of the downward shift that pushed it towards the 1.2622 support level, its lowest in six weeks.
• Clearly, the latest downward move came as investors assessed the monetary policy and political future of Britain.

Last week, the Bank of England (BoE) kept interest rates unchanged, raising hopes for a rate cut in August after comments from policymakers. Also, the local inflation reports showed that the headline inflation rate fell to the BoE target of 2%. Moreover, the upcoming GDP figures will provide more economic insight, after strong retail sales data on Friday tempered some of the optimism from the BoE comments. 

Meanwhile, the so-called “Gamblegate” scandal involving aides to UK Prime Minister Rishi Sunak betting on the election date has caused major political turmoil and threatens to overshadow the rest of the campaign, with Labor expected to win by a wide margin.

What is the GBP/USD forecast for this week? 

We believe that GBP/USD exchange rate will remain vulnerable to further weakness, but Friday could see a rebound if the core inflation reading comes in weak. GBP/USD has entered a short-term downtrend against the USD, but we look for a slight rebound in the coming days if key support holds. The Forex trading chart above shows GBP/USD falling to meet the 100-day moving average at 1.2639, which seems to have halted the selling seen last week and could provide further support in the coming days. 

Currently, the 50-day moving average is also in this vicinity, suggesting a confluence of some key technical levels that could create the basis for a slight rebound towards 1.27. Psychological support at 1.2600 will remain important for continued selling pressure. For the rebound story to develop, we need to see a couple of positive daily closes on Monday and Tuesday to confirm that nearby support levels are holding. 

Technical forecasts for the GPB/USD pair today: 

From a GBP/USD forecast today point of view, overall, at current levels, the pound is testing potential support in the form of the 50-day moving average, but if that gives in, we could see a bounce back to around 1.25, last month’s low. At the moment, strength will be shallow and limited as the daily RSI is at 43 and pointing down in recognition of the recent bearish momentum that has built up. Technically, a break below the aforementioned 100 DMA would be a technical deterioration and confirm a deeper downtrend is building. 

Moving to the economic calendar, it is a quiet week in the UK, but there should be some interest from the US. Concurrently, all eyes will be on the US Core Personal Consumption Expenditures (CCE) release on Friday, which is seen as important for the US Federal Reserve when considering interest rate expectations. Also, the Core PCE rate is expected to come in at 0.1% MoM and 2.6% YoY. If it beats expectations, expect the dollar to end the week at a higher level, with the pound likely to end the week at its lowest level since mid-May. However, if the data is lower than expected, we could see a nice rally in GBP/USD, stabilizing the near-term outlook. However, the strength is likely to be limited in nature as the US dollar appears to be benefiting from the continued outperformance of the US equity market. Ultimately, Credit Agricole believes that the outperformance of US equities could continue to attract unhedged international capital flows into US equity markets, supporting the US dollar.

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• As trading began this week, the value of the Japanese yen fell to around 160 yen per US dollar, approaching its 34-year low of 160.24 yen set on April 29.
• Bank of Japan officials remained divided on how to proceed with raising interest rates.
• In this regard, the Bank of Japan’s summary of opinions from the June meeting showed that members acknowledged the negative impact of rising living costs on consumption, but were hesitant about the timing of policy normalization. 

One member called for early action due to the upside risks to inflation, while others urged caution and needed further confirmation from upcoming data. Overall, the developments came as the Bank of Japan declined to scale back its massive bond purchases in last week’s policy decision, saying it would release a plan to reduce its bond-buying program at its next policy meeting in July. 

Overall, investors are now looking ahead to more economic reports this week including retail sales, industrial production and unemployment data for May, as well as Tokyo inflation figures for June.

Recently, the Japanese yen tried to recover some of its losses due to recent comments from the country’s top currency official, warning that the government is ready to intervene in the forex markets 24 hours a day if necessary. Vice Finance Minister Masato Kanda said, “If there is excessive volatility in the currency, it will have a negative impact on the national economy,”.  Added, “In the event of excessive movements based on speculation, we are ready to take appropriate action.” 

Market watchers warn that the Japanese yen is vulnerable to further declines without appropriate intervention. Moreover, the fact is that the divergence between benchmark interest rates in the US and Japan is wide and is unlikely to change in the future. Recently, it was confirmed that Japan spent over $61 billion intervening in currency markets between April 26 and May 29. Although the Bank of Japan did not provide specific dates, trading patterns have indicated multiple rounds of intervention, such as selling US Treasuries. 

While Japan may appear ready to unleash more weapons, experts believe any action will be muted. “This certainly does not look like an intervention. However, it does indicate how nervous the market is about the possibility of intervention,” Michael Brown, chief research strategist at Pepperstone, told CNBC. “I think as long as any further weakness is not rapid or disorderly in nature, it is unlikely that the Ministry of Finance will intervene now.” 

On the economic data front, there will be some awaited reports from the US and Japan. In the world’s largest economy, there will be crucial inflation data and a final estimate of first-quarter GDP.

USD/JPY Technical analysis and Expectations Today 

The general trend for the USD/JPY pair will remain bullish until the US inflation reading is released at the end of the week or there is an expected intervention from Japan in the currency markets to stop the Japanese currency from further collapsing, which is hurting the economy. Currently, according to the USD/JPY forecast on the daily chart, there will be sensitivity to the Dollar/Yen price breaching the psychological resistance level of 160.00, which will move all technical indicators towards strong overbought levels, and with it, talk of an imminent Japanese intervention will increase. 

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• For the second day in a row, the EUR/USD price is moving higher, holding around 1.0744 at the time of writing.
• Clearly, the rebound came after two sessions of declines as investors assessed fresh economic data and monetary policy expectations ahead of the first round of voting in the French legislative elections on June 30.

On the economic calendar data front, the latest business survey from the German Ifo Institute revealed an unexpected decline in business sentiment for June. On the inflation front, preliminary data for major economies, including France, Spain and Italy, will be published this week. 

Spanish annual inflation is expected to ease to 3.3% in June from 3.6% in May, while consumer prices in Italy are expected to rise 0.2% on the month, the same as in May. Politically, investors are concerned about the French parliamentary elections, with early elections for President Emmanuel Macron adding to the uncertainty. The outcome of the elections, whether in favour of Marine Le Pen’s far-right party or the left-wing alliance, could have a significant impact on financial markets, especially if it results in major policy shifts. 

The question now is: What is the EUR/USD forecast for this week? 

We believe there is room for a recovery in the near term, although it should be shallow as the euro is likely to remain under pressure ahead of the French elections. Moreover, the EUR/USD exchange rate has been recovering since the start of trading this week, and we are looking for near-term consolidation after five consecutive weekly losses. The recent losing streak indicates broader pressure on the exchange rate, which is why we view any periods of strength as short-lived, meaning that those considering buying the US dollar should be smart.

EUR/USD Technical analysis and forecast: 

In fact, there could be some strength in the coming days, we believe. The Forex chart above shows the 100-day moving average at 1.0663, which could form the basis for a return to 1.08 in the immediate outlook. However, we must be cautious, as we will need to see two positive weekly closes before we can call for a return to the 2024 highs. 

The overall trend remains down, with the potential for shallow rebounds. 

The ongoing uncertainty over the French elections and the rise of far-right parties across Europe, not to mention the recent surge in crude oil prices, will continue to weigh on the euro, making the EUR/USD forecast today bearish in the short-term. Thanks to the renewed weakness in Eurozone data and uncertainty over the French elections, we would not be surprised if EUR/USD continues to trend lower in the short-term outlook. Now, it may establish a new ceiling below the 1.07 level. It has already successfully defended previously broken support levels such as 1.0750 and 1.0790. In contrast, the psychological support at 1.0500 will remain an important destination for further bear control of the trend. 

Moving to the US, the ongoing rally in the stock market has proven to be a strong source of support for the US dollar as global investors look to gain exposure to this outperformance. Further gains in the stock market in the coming days and weeks could keep the dollar on the offensive, according to forecasters. Obviously, the main data release this week is the release of core personal consumption expenditures inflation on Friday, which is a key input into the Federal Reserve’s policymaking process. 

Meanwhile, markets expect the Fed to cut rates later this year. If those expectations fade, the dollar could gain strength. Furthermore, the data needs to continue to beat expectations. With that in mind, core PCE is expected to come in at 0.1% month-on-month and 2.6% year-on-year. May consensus was for a 0.1% month-on-month rise, down from 0.2%. 

If it beats expectations, we expect the US dollar to end the week at a higher level, with the EUR/USD likely to end the week at its lowest level not seen since mid-April (1.06).

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