Most read: US dollar strengthens, outperforming US CPI data. EUR/USD, USD/JPY, GBP/USD settings
After a lackluster performance earlier this month, the US dollar (DXY index) rose last week, gaining about 0.23% to 105.31. The recovery was fueled by a slight rise in U.S. Treasury yields and widespread caution among traders as they await the release of April U.S. Consumer Price Index (CPI) data, scheduled for this Wednesday. Ta.
If the pattern of persistently higher-than-expected inflation observed this year is repeated with new cost-of-living data released by the Bureau of Labor Statistics next week, the dollar could strengthen its recent rebound. There is sex.
According to consensus forecasts, both headline CPI and core CPI recorded a 0.3% increase on a seasonally adjusted basis last month, resulting in annual readings of 3.5% to 3.4% for the former and 3.8% to 3.7% for the latter. There was a slight change. Still, it’s a brave step in the right direction.
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USD shorts looking to block the USD’s return will need to see a softer-than-expected CPI report to launch their next bearish attack. Weak CPI data could reignite disinflation expectations and strengthen expectations that the Fed will cut rates for the first time in the cycle in September, with traders currently pegging the probability of that to 48.6%. .
Possibility of FOMC meeting
Source: CME Group
Further upside surprises in the data could push yields higher across the board, assuming the Fed could delay the start of its easing campaign until later this year or until 2025. Higher interest rates in the US should be a tailwind for the US dollar in the short term, as other central banks prepare to start cutting rates.
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EUR/USD Forecast – Technical Analysis
EUR/USD rose slightly last week, but so far has failed to break above the solid technical barrier of the 50-day and 200-day simple moving averages at 1.0790. Bears will have to continue to firmly defend this ceiling. Otherwise, it could move higher towards the trend line resistance at 1.0810. Further strength will draw attention to the 50% Fibonacci retracement of the 2023 decline at 1.0865.
In a scenario where price rejects from current levels and subsequently shifts downwards, the support area is identified at 1.0725, followed by 1.0695. In case of a pullback, the pair may find stability near this floor before starting a reversal, but if a breakdown occurs, it could fall quickly towards 1.0645, with selling momentum If it strengthens, there is a possibility that the bearish trend will continue towards 1.0600.
EUR/USD price action chart
EUR/USD chart created using TradingView
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|
change |
long |
shorts |
OI |
| every day | -6% | 0% | -2% |
| weekly | -11% | 12% | Five% |
USD/JPY Forecast – Technical Analysis
USD/JPY regained strength last week and rose above 155.50. If we see some follow-through to the upside in the coming days, then resistance lies ahead at 158.00 and 160.00. A rise towards these levels should be viewed with caution given the risk of foreign exchange intervention by the Japanese authorities to support the yen, as a repeat of this could trigger a sharp reversal of the decline.
Conversely, if the sellers start fighting back and the price starts heading south, the first support will materialize at 154.65, followed by 153.15. Further losses below this threshold could increase selling interest and pave the way for a move towards trendline support and the 50-day simple moving average located just above the 152.00 handle.
USD/JPY price action chart
USD/JPY chart created using TradingView
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GBP/USD Forecast – Technical Analysis
GBP/USD fell slightly last week but managed to rise above the support at 1.2500. To prevent a larger decline, bulls must resolutely defend this technical floor. A failure to defend could quickly send him plummeting towards 1.2430. Further decline from this point could lead to a pullback towards the April low of 1.2300.
Conversely, if buyers intervene and the price crosses the 200-day SMA, the confluence resistance widens to 1.2600 and 1.2630. This area marks the convergence of the 50-day simple moving average and two notable trend lines. Overcoming this barrier may pose a challenge for bulls, but a breakout could lead to a move towards the 61.8% Fib retracement of the July-October 2023 recession at 1.2720. There is sex.
