EUR/GBP: the euro is growing amid negative forecasts for the German economy
During Asian trading, the EUR/GBP currency pair shows growth, heading towards overcoming the 0.8570 level.
The euro received support from February data on consumer confidence in the European Union, which showed an improvement from -16.1 to -15.5 points, ahead of analysts' forecasts of -15.6 points. At the same time, the euro is being influenced by the downward revision of the German economic growth forecast. Experts now forecast German GDP growth of only 0.2% this year, instead of the previously expected 1.3%, due to weak external demand for German goods, geopolitical risks and high inflation. German inflation is expected to reach 2.8% this year, falling short of the ECB's 2% target. Today's publication of S&P Global business activity data for February attracts the attention of investors, and a slight improvement in indicators in the services and manufacturing sectors is predicted.
- Resistance levels: 0.8577, 0.8591, 0.8611, 0.8632.
- Support levels: 0.8562, 0.8546, 0.8519, 0.8500.
NZD/USD: reassessment of the timing of the easing of the US Federal Reserve policy
The NZD/USD currency pair is showing significant growth, continuing to form a bullish trend that began on February 14. At the moment, the pair is trying to overcome the 0.6200 level, updating the highs recorded since January 16.
The strengthening of the New Zealand dollar is facilitated by the current weakness of the US dollar, which became apparent after the publication of the results of the January meeting of the Federal Reserve System. The participants of the Federal Open Market Committee expressed concern about the risks of early interest rate cuts compared with the duration of tightened monetary policy. As a result, markets adjusted expectations for Fed policy easing in May and June, where the probability of a 25 basis point correction is estimated at 35%, according to the CME FedWatch Tool from the Chicago Mercantile Exchange.
The positive trend for NZD/USD was not disrupted even by weak economic indicators from New Zealand, where exports fell from $5.85 billion to $4.93 billion in January, and imports fell from $6.22 billion to $5.91 billion, which led to an increase in the trade deficit from $368 million to $976 million in a month. New Zealand retail sales data for the fourth quarter of 2023 is also expected to be released this evening.
- Resistance levels: 0.6200, 0.6221, 0.6250, 0.6300.
- Support levels: 0.6158, 0.6130, 0.6100, 0.6060.
AUD/USD: the market evaluates the results of the last sessions of the RBA and the US Federal Reserve
The AUD/USD currency pair is at 0.6580 and is aimed at further strengthening to the target of 0.6616.
This week, the results of the last meeting of the Reserve Bank of Australia (RBA) were presented. During the meeting, the regulator expressed the opinion that before making a decision to reduce the interest rate from the current level of 4.35%, additional time and data analysis will be required, with special attention to achieving a stable rate of inflation reduction to the target level of 2.0%. Salary growth in the fourth quarter was in line with experts' forecasts, showing an increase of 0.9% compared to the previous quarter and reaching 4.2% on an annual basis, which was higher than the expected 4.1%. This may encourage the RBA to maintain a high level of interest rates for longer than expected by the market, although most analysts still believe that the bank will begin to ease monetary policy this fall.
- Resistance levels: 0.6616, 0.6675, 0.6727.
- Support levels: 0.6538, 0.6447.
Silver market analysis
The XAG/USD currency pair is experiencing a slight rise, approaching the level of 23.00. Market activity remains moderate, despite the abundance of economic data.
Expectations of a soft monetary policy by the US Federal Reserve contribute to the support of silver. The analysis of the CME Group FedWatch Tool shows a decrease in the probability of interest rate cuts in May from the previously estimated 60% to the current 35%. The publication of the minutes of the January Fed meeting confirmed such sentiments, where FOMC members expressed concern about the rate of decline in inflation to the target level of 2%. There is an opinion that expectations for a decrease in inflation may not come true, which pushes the regulator to continue careful monitoring of the economic situation, and the risks are associated with an early reduction in rates rather than with a long period of their high level.
Today, investors will also focus on the statistics of applications for unemployment benefits and on February business activity data from S&P Global, where a slight decrease in indices in the service and manufacturing sectors is expected.
- Resistance levels: 23.00, 23.32, 23.60, 23.83.
- Support levels: 22.70, 22.50, 22.21, 22.00.