2024-04-07 01:31:30 ET

The NZD/USD exchange rate will be in the spotlight this week as the Reserve Bank of New Zealand (RBNZ) delivers its second interest rate decision of the year. After retreating to a multi-month low of 0.5940 on Monday, the pair rebounded to above 0.6000 after the US non-farm payrolls (NFP) data.

RBNZ decision preview

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of this week will be the upcoming RBNZ decision set for Wednesday. In it, economists believe that the bank will decide to leave interest rates unchanged at 5.5%, where they have been in the past few months.

The RBNZ, like other central banks, has hinted that it is done with hikes. As a result, the key catalyst for the Kiwi will be the hint on when the bank will start cutting interest rates.

Recent data showed that the central bank is winning its

battle against inflation

. According to the country’s statistics agency, the headline Consumer Price Index (CPI) came in at 4.7% in Q4’23, down from 5.8% in the previous quarter.

New Zealand’s inflation has been in a strong downward trend after peaking at 7.3% in 2022. Still, the figure remains significantly higher than the historical average. It is also more than double the RBNZ target of 2.0%.

At the same time, the economy is not doing well. The most recent data showed that the economy contracted by 0.3% in Q4 after retreating by 0.6% in Q3. This means that it has moved into a technical recession. As such, the bank may hint that it will start cutting rates in the next few meetings to boost the economy.

The RBNZ decision will come a few days after the US published strong

nonfarm payrolls



data. According to the BLS, the unemployment rate retreated to 3.8% in March as the economy added over 300k jobs. Wage growth continued rising.

Therefore, analysts believe that the Fed will not cut rates in May and June as previously predicted. The bank may start slashing rates in July and followed by a final one in December.

NZD/USD forecast

NZD/USD chart by TradingView

The daily chart shows that the NZD to USD exchange rate peaked at 0.6370 in January as hopes of Federal Reserve rate cuts increased. It then crashed hard to a low of 0.5940 last week as these hopes faded.

The pair has remained much lower than the 50-day and 25-day Exponential Moving Averages (EMA). It also retested the important Woodie pivot point at 0.6035. Therefore, the outlook for the pair is bearish, with the initial target being at 0.5940, its lowest point last week. A break below this support will see it drop to the first support at 0.5850.

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NZD/USD forecast: signal ahead of the RBNZ interest rate decision

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US DOLLAR FORECAST – EUR/USD, USD/JPY, GBP/USD

• The U.S. dollar finishes the week moderately lower, easing off multi-month highs
• All eyes will on the March U.S. inflation report in the week ahead
• This article discusses the technical outlook for EUR/USD, USD/JPY and GBP/USD

Most Read: USD/JPY Tiptoes Towards Bullish Breakout after Strong US Jobs Data. What Now?

The U.S. dollar, as measured by the DXY index, lost ground over the past five trading sessions, marking the end of a three-week winning streak that had propelled prices to 5-month highs by Tuesday. When all was said and done, the DXY retreated 0.24% to settle at 104.28, with the euro‘s strength being the primary factor behind this movement.

Despite this subdued performance, the greenback should not be written off just yet, as it may be able to restart its advance and regain momentum soon, especially if the March U.S. inflation report, due for release on Wednesday, beats projections and confirms Wall Street’s worst nightmare: progress on disinflation has hit a roadblock.

Consensus estimates suggest headline CPI climbed 0.3% on a seasonally adjusted basis last month, lifting the annual rate to 3.4% from 3.2% previously. The core gauge is also seen rising 0.3% month-on-month, but the 12-month reading is projected to have slowed to 3.7% from 3.8% in February, a positive but tiny step in the right direction.

Source: DailyFX Economic Calendar

RECENT FEDSPEAK

Fed Chair Powell, in a speech at the Stanford Business, Government, and Society Forum earlier this week, stated that nothing has changed for the FOMC in terms of its policy outlook outlined in the latest Summary of Economic Projections, signaling that 75 basis points of easing remains on the table for the year. His comments appeared to deflate the U.S. dollar as we moved towards the latter part of the week.

Although Powell is the most important voice at the Federal Reserve, other officials are beginning to express reservations about committing to a preset course. Fed Governor Michelle Bowman, for instance, has indicated that headway in disinflation efforts has stalled and that she wouldn’t be comfortable cutting rates until renewed price pressures abate. She also mentioned that hiking rates again is possible, though not likely.

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Fed Dallas President Lorie Logan also seemed to have embraced a more aggressive posture, emphasizing that it’s too early to consider easing measures. In support of her viewpoint, she cited hotter-than-expected CPI readings lately and signs that elevated borrowing costs may not be restraining aggregate demand as much as originally thought.

All things considered, if the inflation outlook continues to evolve unfavorably, the U.S. central bank may have no other choice but to start coalescing around a more hawkish position, with the robustness of the labor market giving policymakers plenty of wiggle room to be patient before pivoting to a looser stance. This could mean delayed interest rate reductions and shallow cuts this year once the process finally gets underway.

The following table shows the probabilities of Fed action at various FOMC meetings.

Source: CME Group

In light of the aforementioned points, traders should closely watch the upcoming inflation numbers and brace for volatility. That said, an upside surprise in the data, particularly in the core metric, could reinforce the upswing in U.S. Treasury yields seen in the first days of April, allowing the U.S. dollar to resume its upward journey and command leadership in the FX space.

Meanwhile, a lower-than-anticipated print on the all-items and core indices could have the opposite effects on markets, resulting in lower government rates and a softer U.S. dollar. However, for this scenario to play out, the divergence of the final data from expectations would need to be substantial; otherwise, the impact on bonds and the U.S. currency would be more measured.

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EUR/USD TECHNICAL ANALYSIS

EUR/USD dipped to multi-week lows at the start of the week, only to rebound from trendline support around 1.0725, with this bounce propelling prices above both the 50-day and 200-day simple moving averages. Should the pair build upon its recent recovery over the coming sessions, Fibonacci resistance emerges at 1.0865. On further strength, all eyes will be on 1.0915.

Alternatively, should sellers regain control and drive prices below the key moving averages mentioned earlier, a retreat towards 1.0840 might ensue. Bulls must vigorously defend this technical floor; a failure to do so might exacerbate negative sentiment towards the euro, potentially triggering a drop towards the 1.0700 handle. Below this area, attention should gravitate towards 1.0625.

EUR/USD PRICE ACTION CHART

EUR/USD Chart Created Using TradingView

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USD/JPY TECHNICAL ANALYSIS

USD/JPY has exhibited range-bound behavior over the past two weeks, oscillating between resistance near 152.00 and support at 150.90. This suggests a consolidation period is underway. With that in mind, traders should be on the lookout for either a breakout (152.00) or a breakdown at (150.90) for guidance on the near-term outlook.

In the event of bullish breakout, a rally towards the upper boundary of a short-term ascending channel at 155.25 may follow, provided Tokyo stays on the sidelines and refrains from intervening in the FX space to support the yen. Conversely, in case of a breakdown, sellers could begin to trickle back into the market, setting the stage for a drop towards 149.75 (50-day SMA), followed by 148.85.

USD/JPY PRICE ACTION CHART

USD/JPY Chart Created Using TradingView

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Change in	Longs	Shorts	OI
Daily	6%	-17%	-5%
Weekly	-10%	4%	-5%

What does it mean for price action?

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GBP/USD TECHNICAL ANALYSIS

GBP/USD fell early in the week but bounced back in the following days, ultimately reclaiming its 200-day SMA. However, the upward impulse faded when prices failed to clear cluster resistance at 1.2670, near the intersection of three key trendlines. Traders should monitor this area closely, keeping in mind that a bearish rejection could send cable tumbling back towards 1.2590 and possibly even 1.2520.

On the other hand, if the bulls succeed in pushing the exchange rate above 1.2670 in a decisive fashion, buying interest could pick up traction in the upcoming trading sessions, fostering conditions for a potential climb towards the 1.2800 handle. Further upside progression beyond this juncture could open the door to a retest of last month’s high in the vicinity of 1.2895.

GBP/USD PRICE ACTION CHART

GBP/USD Chart Created Using TradingView

GBP/USD Forecast Video for 12.07.23

British Pound vs US Dollar Technical Analysis

The British pound has rallied a bit during the trading session on Tuesday, but then pulled back just a bit during the trading session as a little bit of exhaustion may have entered the market. At this point, it looks like the British pound is going to try to go looking toward the 1.30 level above, which is a large, round, psychologically significant figure.

Underneath, we have the 50-Day EMA, which is sitting right around the 1.2650 level, which is an area where we have bounced from previously. I think that is the bottom of your overall short-term range, and therefore I think that the market remains a bit of a “buy on the dip” type of situation, as we see a lot of upward pressure over the longer-term, but it’s obvious that we cannot go in one direction forever. After all, there will have to be a bit of profit-taking from time to time, which might be part of what we had seen during the day.

If we break above the 1.30 level, then it’s possible that the market then could go much higher, perhaps opening up a move toward the 1.3250 level, as we continue to see traders focus on inflation in the United Kingdom. While we do have inflation in the United States, it seems like traders believe that the Federal Reserve is much closer to cutting back on interest rate hikes, so therefore I think this is more or less a relative trade than anything else. Both currencies could be strong going into the future, but it’s worth noting that the British pound has been a bit of an outperformer for a while, so one would have to assume that translates into better performance in the future.

At this point, a pullback toward the 50-Day EMA could very well happen, but it would not change the overall trend, so therefore I still look at it through the prism of buying on the dips and trying to take advantage of what has been a very substantial trend for quite some time. However, if we were determined to break down below the 50-Day EMA, it could open up quite a bit of questions.

Story continues

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 Weekly Technical Analysis

Taking a look at the Australian dollar on the weekly time frame, you can see that we continue to bounce around in the same noisy area. The 0.6450 level underneath would be a major support level, right along with the 0.6650 level above being massive resistance. This is an area that has shown itself to be important more than once.

Quite frankly, at this point in time, it looks like it’s going to be a very consolidated type of situation. And therefore, I think you’ve got a market that is more in tune with short term moves. That being said, if we can break above the 0.6650 level, then the market could go looking to the 0.6850 level underneath the 0.6450 level being broken opens up the possibility of a move down to the 0.6350 level. This would be a massive “risk off move” though, so we will see if that actually happens.

Keep in mind that the Australian dollar is a risk on currency. So, a lot of this will come down to that. But we also have to pay attention to the Federal Reserve if they are in fact going to keep monetary policy tight. That keeps a little bit of a lid on this. Ultimately, this is a very neutral market, and I just don’t want to put a lot of money into it from a longer term standpoint. This is a market that essentially is waiting for some kind of fundamental change in attitude or interest rate outlook to get moving from what I can tell.

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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The Euro to Dollar exchange rate (EUR/USD) has only fleetingly traded above 1.10 this year while there has been support just below 1.07.

Nordea expects that EUR/USD will be trapped in a 1.05-1.10 range over the next year.

Central bank policy actions will inevitably be key elements for currencies.

As far as the US is concerned, it notes that recent data has been disappointing and expects that it will take some months before the Fed is comfortable in cutting rates.

In this context, it expects that the first rate cut will not be delivered until September.

Nordea, along with the market, is confident that the ECB will cut interest rates in June.

It notes an important element of uncertainty thereafter, but expects one rate cut per quarter.

The bank expects that the overall US economic performance will underpin the dollar as the Fed adopts a cautious stance.

It also considers a Trump election victory would trigger initial dollar support.

Support is likely to be offset by an improving global economy which will curb defensive support for the US currency.
Looking at the balance of forces, the bank expects that EUR/USD will be trapped in relatively narrow ranges during the forecast period.

Key Quotes:
“We still believe that EURUSD will move largely sideways going forward.”

“We expect a still strong economic performance in the US, lesser rate cuts from the Fed than the ECB in the coming period.”

“Longer out, lower global rates should continue to support economic activity and risk sentiment, lowering the appeal of the USD from a safe-haven standpoint.”
“Broadly speaking, we still see EURUSD range locked between 1.05-1.10 area ahead.”

See live currency exchange rate here.

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U.S. Dollar

DXY 050424 4h Chart
U.S. Dollar Index is mostly flat as traders react to the Non Farm Payrolls report, which indicated that U.S. economy added 303,000 jobs in March, compared to analyst consensus of 200,000. Unemployment Rate declined from 3.9% to 3.8%, while analysts expected that it would remain unchanged at 3.9%. The report highlighted the strength of the U.S. economy, which is bullish for the U.S. dollar.

Interestingly, U.S. Dollar Index did not manage to settle above the resistance at 104.40 – 104.60. This is a major disappointment for the bulls.

EUR/USD

EUR/USD 050424 4h Chart
EUR/USD rebounded from session lows as traders reacted to U.S. economic reports. In the EU, Retail Sales declined by 0.5% month-over-month in February, compared to analyst consensus of -0.4%.

If EUR/USD manages to stay above the 1.0830 level, it will head towards the nearest resistance at 1.0900 – 1.0920.

GBP/USD

GBP/USD 050424 4h Chart
GBP/USD has also managed to rebound from session lows despite rising Treasury yields.

A move above the resistance at 1.2650 – 1.2685 will open the way to the test of the next resistance at 1.2800 – 1.2825.

USD/CAD

USD/CAD 050424 4h Chart
USD/CAD pulled back after an unsuccessful attempt to settle above the resistance at 1.3600 – 1.3620. Rising oil markets provided additional support to the Canadian dollar.

If USD/CAD settles below the 1.3550 level, it will head towards the support at 1.3480 – 1.3500.

USD/JPY

USD/JPY 050424 4h Chart
USD/JPY remains stuck near the key 152.00 level. Traders are worried that BoJ will intervene if USD/JPY moves above 152.00.

The technical picture has not changed in recent trading sessions. Traders are not ready to buy USD/JPY above 152.00 because of potential interventions. At the same time, they are not ready to sell as the Japanese yen remains fundamentally weak due to the ultra-dovish policy of Japan’s central bank. As a result, USD/JPY is stuck below 152.00.

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Australian Dollar vs US Dollar Weekly Technical Analysis

Taking a look at the Australian dollar on the weekly time frame, you can see that we continue to bounce around in the same noisy area. The 0.6450 level underneath would be a major support level, right along with the 0.6650 level above being massive resistance. This is an area that has shown itself to be important more than once.

Quite frankly, at this point in time, it looks like it’s going to be a very consolidated type of situation. And therefore, I think you’ve got a market that is more in tune with short term moves. That being said, if we can break above the 0.6650 level, then the market could go looking to the 0.6850 level underneath the 0.6450 level being broken opens up the possibility of a move down to the 0.6350 level. This would be a massive “risk off move” though, so we will see if that actually happens.

Keep in mind that the Australian dollar is a risk on currency. So, a lot of this will come down to that. But we also have to pay attention to the Federal Reserve if they are in fact going to keep monetary policy tight. That keeps a little bit of a lid on this. Ultimately, this is a very neutral market, and I just don’t want to put a lot of money into it from a longer term standpoint. This is a market that essentially is waiting for some kind of fundamental change in attitude or interest rate outlook to get moving from what I can tell.

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

This article was originally posted on FX Empire

More From FXEMPIRE:

Australian Dollar vs US Dollar Weekly Technical Analysis

Taking a look at the Australian dollar on the weekly time frame, you can see that we continue to bounce around in the same noisy area. The 0.6450 level underneath would be a major support level, right along with the 0.6650 level above being massive resistance. This is an area that has shown itself to be important more than once.

Quite frankly, at this point in time, it looks like it’s going to be a very consolidated type of situation. And therefore, I think you’ve got a market that is more in tune with short term moves. That being said, if we can break above the 0.6650 level, then the market could go looking to the 0.6850 level underneath the 0.6450 level being broken opens up the possibility of a move down to the 0.6350 level. This would be a massive “risk off move” though, so we will see if that actually happens.

Keep in mind that the Australian dollar is a risk on currency. So, a lot of this will come down to that. But we also have to pay attention to the Federal Reserve if they are in fact going to keep monetary policy tight. That keeps a little bit of a lid on this. Ultimately, this is a very neutral market, and I just don’t want to put a lot of money into it from a longer term standpoint. This is a market that essentially is waiting for some kind of fundamental change in attitude or interest rate outlook to get moving from what I can tell.

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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2024-04-05 08:32:37 ET

The USD/CAD exchange rate rose for the second straight day after the latest US and Canadian jobs numbers. It rose to a high of 1.3580 on Friday, higher than this week’s low of 1.3477.

US and Canada jobs numbers

The USD/CAD pair has been quite volatile this week as traders reflected on the statement by Federal Reserve officials, including Jerome Powell. Other officials who talked were Mary Daly, Loretta Mester, and Raphael Bostic.

The pair also reacted to the strong manufacturing numbers from the US. In a report on Monday, the Institute of Supply Management (ISM) said that the manufacturing PMI rose to 52.2 in March, the first time that it grew since 2022.

The most important economic data came out on Friday when the US and Canada published their March jobs reports.

In a statement, the Bureau of Labor Statistics (BLS) said that the

economy added

303k jobs in March. It also downgraded the previous month’s numbers from 275k to 270k.

Further data revealed that the unemployment rate improved to 3.8%. Wage growth remained strong as it expanded by 4.1% during the month.

These numbers imply that the labor market is still strong despite the recent layoffs by companies like Apple, Meta, and Disney. As such, there is a likelihood that the Federal Reserve will hold steady for at least two more meetings.

Meanwhile, in Canada, the unemployment rate rose from 5.8% in February to 6.1% in March. That happened as the country shed 2.2k jobs after adding 40.7k in the previous month.

There is a likelihood that the Bank of Canada will deliver its rate cut earlier than the Federal Reserve since inflation is falling at a faster pace. The headline Consumer Price Index (CPI) fell to 2.8% in February, down from 8.1% in June 2021.

USD/CAD technical analysis

USD/CAD chart by TradingView

The daily chart reveals that the USD to CAD exchange rate dropped to a low of 1.3477 on Thursday and then rebounded to a high of 1.3580. Its lowest point was notable since it was along the lower side of the ascending channel shown in black.

The pair has remained above the 50-day Exponential Moving Average (EMA), which is a bullish sign. It also formed a hammer pattern, which is a sign of a positive sign. Therefore, the outlook for the pair is bullish, with the next point to watch being to 1.3635, the upper side of the channel and its highest swing on November 3rd last year.

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USD/CAD forecast after the US and Canada jobs reports

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GBP/JPY Forecast Video for 23.02.23

British Pound vs Japanese Yen Technical Analysis

The British pound has pulled back just a bit during the trading session on Wednesday, as we have seen a little bit of a pullback from that move to the upside on Tuesday. Tuesday was a major breakout, so it does make quite a bit of sense that we would have a little bit of exhaustion and profit-taking head back into the market. The ¥162.50 level is an area of previous resistance that now should offer support, from the major bottoming pattern that we had formed over the last couple of months. Keep in mind that the interest-rate differential is extraordinarily high between Great Britain and Japan, as the Bank of Japan is continuing to fight interest rates rising in that country, with a cap of 50 basis points on the 10 year yield. As that happens, it’s likely that we will continue to see the Japanese yen lose strength overall, as we had seen last year.

If we were to pull back below the ¥162.50 level, then it’s possible that the market could go down to the 200-Day EMA, and then the 50-Day EMA underneath there. The ¥161.50 level underneath is the confluence of those moving averages, so it does make quite a bit of sense that we would see perhaps some support in that general vicinity. That huge bottoming pattern was quite impressive and took a long time to form after that major selloff. Because of this, and the fact that we are seeing the yen weaken against most other currencies, it does make a certain amount of sense that there will be momentum in this market overall. The size of the candlestick on Tuesday was quite impressive, so one would have to think that there’s probably a bit of follow-through coming.

Buying on dips will be the strategy that I employ, at least until we break through those major moving averages. On the upside, I suspect that we are going to go look into the ¥165 level, where we had sold from quite drastically, and of course where we had previously seen quite a bit of support last year.

Story continues

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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