EUR/USD: the US Federal Reserve adjusted its GDP forecast to 2.1%
The EUR/USD currency pair shows a slight drop, continuing to follow the "bearish" trend that developed on the previous day. Currently, the exchange rate is trying to overcome the level of 1.0830 down, while the market is carefully awaiting the March statistics from Germany, which will be provided by the Institute for Economic Research (IFO). Analytical forecasts foreshadow an increase in the business optimism index from 85.5 to 86.0 points and an increase in the index of economic expectations from 84.1 to 84.7 points, while the assessment of current conditions may slightly decrease from 86.9 to 86.8 points.
Yesterday's data on economic activity in the countries of the European monetary area caused mixed reactions. In particular, a significant drop in the French manufacturing index from S&P Global to 45.8 points, against the expected 47.5 points, and a decrease in the index in the service sector to 47.8 points with a forecast of 48.7 points attracted the attention of investors. At the same time, in Germany, activity in the service sector accelerated to 49.8 points, which significantly exceeded forecasts of 48.8 points, although the manufacturing sector showed a slowdown to 41.6 points, contrary to expectations of 43.1 points.
- Resistance levels: 1.0864, 1.0900, 1.0930, 1.0964.
- Support levels: 1.0838, 1.0820, 1.0800, 1.0765.
AUD/USD: solid labor market contributes to high RBA key rate
The AUD/USD currency pair is experiencing a noticeable drop, moving away from the peak values set on March 13 and updated a day earlier. During the Asian trading session, the currency tested the 0.6525 level, trying to break it down, while the US dollar is showing recovery after recent losses. The positive dynamics of the US currency is supported by increased demand for risky assets, due to high interest rates and stable macroeconomic indicators. Analysts have recently revised their forecasts regarding the probability of a rate cut by the US Federal Reserve in June, now estimating it at about 50%, with the possibility of further reduction if the slowdown in inflation proves insufficient.
The Australian dollar strengthened after the publication of impressive labor market data, with an increase in the number of jobs by 116.5 thousand in February, significantly exceeding analysts' expectations of an increase of 40.0 thousand. At the same time, the indicator for January was adjusted from 0.5 thousand to 15.3 thousand. Unemployment fell from 4.1% to 3.7%, against the forecast of 4.0%. These data indicate the continued strength of the Australian labor market, allowing the Reserve Bank of Australia to maintain the interest rate at an elevated level. Preliminary data on economic activity for March were also published, a decrease in the manufacturing sector to 46.8 points and an increase in the services sector to 53.5 points, while the overall activity index improved to 52.4 points.
- Resistance levels: 0.6551, 0.6578, 0.6600, 0.6616.
- Support levels: 0.6524, 0.6500, 0.6486, 0.6468.
NZD/USD: New Zealand currency reaches new minimum values
The NZD/USD currency pair is experiencing a slight drop, continuing to move within the framework of a short-term downtrend and updating the lows reached in November 2023. The exchange rate is trying to overcome the level of 0.6015 in the direction of further decline, while the US dollar finds support in the growing interest in risky assets and lower expectations of an early reduction in the cost of lending by the Federal Reserve System.
Last week, the US Federal Reserve held a meeting, the results of which did not bring changes in monetary policy. The authority confirmed its position on the need for additional evidence of a stable decline in inflation towards the 2% target. Expectations for an interest rate cut for the current year have also been revised: three 25 basis point cuts are now forecast, as opposed to the four expected in December.
The New Zealand dollar is under pressure due to the latest economic reports: The country's GDP for the fourth quarter of 2023 decreased by 0.1%, following a decrease of 0.3% in the previous quarter, despite forecasts of growth of 0.1%. The annual GDP figure also decreased by 0.3%, which is an improvement over the 0.6% drop and contradicts analysts' expectations of 0.1% growth.
- Resistance levels: 0.6030, 0.6049, 0.6076, 0.6100.
- Support levels: 0.6000, 0.5975, 0.5950, 0.5920.
GBP/USD: the Bank of England's interest rate remained unchanged at 5.25%
During the Asian trading session, the GBP/USD exchange rate shows a noticeable drop, being around the 1.2628 mark against the background of the latest business activity data and the results of the Bank of England's monetary policy meeting.
On the previous day, the expected decision of the Bank of England to maintain the interest rate at 5.25% was announced, with only one vote in favor of reducing rates. The statement after the meeting pointed to a decrease in inflationary pressure and a slowdown in wage growth, although these indicators still significantly exceed the target values, which poses additional risks to the economy in the event of too rapid monetary policy easing. The Bank's forecasts remain stable: inflation is expected to fall below 2% in the second quarter, after which a slight increase is possible. Current data showed a slight decrease in the index of business activity in the service sector to 53.4 points from 53.8, in the manufacturing sector an increase to 49.9 points from 47.5, and the composite index decreased to 52.9 points from 53.0.
- Resistance levels: 1.2700, 1.2860.
- Support levels: 1.2600, 1.2500.