EUR/USD: dollar is afloat again

AUD/USD showed moderate growth, developing an upward momentum on Wednesday, moving away from the lows on April 23. Currently, the pair is testing the 0.6535 level for an upward breakout, and traders are analyzing the April Australian foreign trade report.According to the data, Australian exports increased by 0.1%, while imports decreased from 4.5% to 4.2%. As a result, the balance sheet surplus decreased from AUD 6.591 billion to AUD 5.024 billion, slightly below the expected AUD 7.370 billion. Meanwhile, retail sales fell by 0.4% in March, showing the lowest annual growth except during the COVID-19 pandemic. These data indicate weak consumer demand and an increase in household debt obligations in the context of the "hawkish" policy of the Reserve Bank of Australia (RBA). Earlier, traders drew attention to business activity in the country: the manufacturing index fell from 49.9 to 49.6, the production index from -7.0 to -13.9, and the construction index from -12.9 to -25.6. Business activity in various sectors of the Australian economy continues to decline.Today, market participants are waiting for data from the United States on applications for unemployment benefits. It is expected that during the week the number of initial applications will grow from 207.0 thousand to 212.0 thousand, and the number of repeat applications will remain close to the previous 1.781 million.Tomorrow, data on business activity in the service sector will be published in Australia, and data on the labor market in the United States. The growth of new jobs outside the agricultural sector is projected to slow down from 303.0 thousand to 243.0 thousand.On the daily chart, the Bollinger Band indicator indicates an uptrend. The MACD indicator is growing and gives a weak buy signal, while the stochastic, on the contrary, is decreasing, indicating that the instrument is oversold in the short term.Purchases can be opened after the breakdown and consolidation of the pair above the level of 0.6586 with a target of 0.6661. We will place the stop loss at 0.6540.A rebound from the 0.6586 level and a subsequent breakdown of the 0.6545 level down may be a signal for the formation of short positions with a take profit of 0.6450. In this case, we set the protective stop loss at 0.6586.

FOREX Fundamental analysis for EUR/USD on May 2, 2024Jerome Powell failed to create panic in forex currency trading. And it is unlikely that he aspired to it. For the S&P 500 and EURUSD, the Fed chairman's speech was a positive factor, as it did not present any surprises. However, the bad thing is that the bar for lowering the federal funds rate remains high, although not as high as for raising it. The Federal Reserve intends to act based on new data, which forces investors to pay great attention to the April statistics on the American labor market.Market participants breathed a sigh of relief when Jerome Powell stated that he saw no reason to resume the cycle of monetary restriction. The S&P 500 and EURUSD immediately went up, and US Treasury yields declined. This is good news for risky assets, but not for the dollar. Raising rates requires convincing evidence that current policies are failing to contain inflation.The American economy is not particularly stressed by high rates yet. However, financial conditions depend quite heavily on inflation data, which is of concern to the Fed. According to Jerome Powell, the Central Bank has not finished its work yet, but high PCE figures are already in the past.Initially, the reaction of the markets to the results of the FOMC meeting was a relief. The market expected the Fed to take a tougher stance. However, Jerome Powell seems to think that the current acceleration in inflation is temporary. He cannot say exactly when the federal funds rate will be lowered, although in the futures market the probability of the beginning of a cycle of monetary expansion in September exceeded 50%. This gave additional support to EURUSD.The Fed, backed by a strong economy, can keep rates at a high plateau for a long time, while other Central banks are ready to reduce them. Of the 56 Bloomberg regulators monitored, 5 cut rates in April. The ECB is planning a reduction in June, and later the Bank of England. This creates a solid foundation for the US dollar. However, the future fate of the greenback will depend on macroeconomic data.In this context, the statistics on employment in the United States will give an important clue. Forecasts by Bloomberg experts suggest that employment will grow by 243 thousand in April, which is a very good indicator. Unemployment is likely to remain at 3.8%. Interestingly, according to Jerome Powell, the Fed is ready to cut rates with a significant increase in unemployment. This underscores the importance of labor market statistics for the Fed, as they help determine the prospects for inflation and the economy.Upcoming statistics on the US labor market may cause the EURUSD to slow down in the range of 1.07-1.072. We do not practice forex trading based on news and will remain outside the market.EUR/USD Technical analysis for EUR/USDOn Wednesday, EUR/USD adjusted upwards and reached resistance 1.0741 - 1.0733. Nevertheless, the pair maintains a short-term downtrend. Near zone, we will consider entering short positions with a target at yesterday's minimum. If the pair consolidates below the extreme, then we expect the downward trend to fall towards the 1.0561 - 1.0544 zone.The trend boundary is the 1.0750 level. If EUR/USD breaks through this level and gains a foothold higher, then in the short term, the trend direction will change to an upward one. In this case, we will look for an entry into purchases with a target at the upper boundary of the 1.0878 - 1.0853 area.

FOREX Fundamental analysis for EUR/USD on May 1, 2024An ancient Chinese proverb says: "Don't do anything, and everything will be done." This principle also applies to the Fed, which is ready to keep the federal funds rate unchanged for the sixth time in a row. However, forex currency trading requires a revival. Options show that investors are expecting the strongest S&P 500 move since May 2023. If so, then EURUSD will not remain indifferent to the decision of the Federal Reserve.The point is to change the position of the FOMC. In December, the Fed made a sharp turn, opening the door for 6-7 acts of monetary expansion. Jerome Powell prepared markets for a possible rate cut throughout the first quarter, despite the strengthening economy. However, in April, his rhetoric changed. He said that the latest data did not confirm a decrease in inflation to the target level of 2%, and the fight against it would take longer than the regulator expected.Most likely, at a press conference on May 1, the chairman of the Federal Reserve will confirm his opinion. But why are the markets so tense? It's all about changing the Fed's views. Investors are not sure whether the Central Bank will stick to the previous mantra of reducing inflation or change its mind and signal that the PCE is approaching 3%. In the first case, there is hope for a reduction in federal funds rates at 1-2 FOMC meetings in 2024, which will help EURUSD. In the second case, we can expect rates to remain at 5.5% with risks of resuming the cycle of monetary restriction. Such a scenario would be "bearish" for both the S&P 500 and EURUSD.After an unexpected acceleration in labor costs from 0.9% to 1.2% in the first quarter, the stock market was under pressure, which was reflected in EURUSD through currency correlation. The S&P 500 closed April with a 4.2% drop, supporting the US dollar.Even despite higher economic growth in the Eurozone and a not particularly rapid slowdown in core inflation, the euro is not receiving support. According to the president of the Bank of France, Francois Villaroy de Galo, the data increased the probability of a price decline to the target level of 2% and increased the chances of a June reduction in deposit rates.In short, even the Fed's inaction can scare the markets. The Fed has probably realized its mistakes, and now it can switch to hawkish rhetoric. Against this background, the risks of EURUSD decline in the direction of 1.06 and 1.05 are increasing. Therefore, we leave the previously formed shorts and prepare to increase short positions with each rise.Technical analysis for EUR/USDEUR/USD is still in a short-term downtrend. The sellers' target is the minimum from April 16. When updating this extreme, the next target is the area 2 1.0561 - 1.0544. We continue to hold short positions opened from the resistance area of 1.0739 - 1.0685.For purchases, you should wait for signs of a trend change. To do this, EUR/USD will need to break through and gain a foothold above the 1.0739 level. In this case, the upper limit of the range 1.0878 - 1.0853 will be the target.

FOREX Fundamental analysis for EUR/USD on April 30, 2024Anyone who knows about a possible threat can take timely measures to protect themselves. The rise in inflation in the United States in the first quarter was a kind of warning for other Central Banks. Although the United States economy seemed much stronger than all the others, this does not mean that high prices cannot return to other regions, including the Eurozone with its weak economy. This fact makes the ECB cautious, especially ahead of the publication of data on the European consumer price Index (CPI), which leads to a lull in EURUSD trading.ECB Vice President Luis de Guindos talks about two-way risks. On the one hand, the strengthening of the labor market creates pressure on wages, which, with rising energy prices, can cause an inflationary jump. On the other hand, high interest rates can negatively affect demand, especially if the global economy encounters unexpected obstacles.Recent Eurozone consumer price data only strengthens the case for the ECB's unhurried action. For example, in Spain, the CPI index accelerated for the second month in a row, and in Germany, the index rose from 2.3% to 2.4% in April. Inflation in the Euroblock is projected to remain around 2.4%, although core inflation will decrease from 2.9% to 2.7%.However, if in Europe the interest rate cut in June is already a done deal, then in the United States the situation is different. According to Citi, if you ignore the rhetoric of the Fed members, and judge only by the data, then the federal funds rate should not be reduced, but increased. The probability of such a scenario in early 2025 is estimated by derivatives at 22%. The probability of maintaining the interest rate at 5.5% in 2024 has increased from 20% to 31%.FOMC forecasts of three acts of monetary expansion have sunk into the past. Investors are now counting on two declines. Fed Chairman Jerome Powell is expected to repeat recent rhetoric about the need to keep rates at a high plateau for a longer time.At the same time, despite the fluctuation of market opinions regarding the monetary policy of the Federal Reserve, stocks continue to grow, which helps to keep the EURUSD from falling significantly. There have even been thoughts on Forex that if the Central Bank had cut rates 6-7 times, as expected at the beginning of the year, the economy would have been in recession. But thanks to this, everything goes on as usual, and the S&P 500 continues to grow.Market participants are eagerly awaiting statistics on European inflation, the Fed meeting and the report on the US labor market. Although the acceleration of the consumer price index in the Eurozone to 2.5% and above may be a catalyst for the growth of EURUSD, I would advise you to be careful with purchases. The ECB needs more time and information to change its policy course. Therefore, my forex trading strategy remains unchanged: selling euros when rising to $1.08 or when falling below $1.07.Technical analysis for EUR/USDEUR/USD retreats from the resistance 1.0739 - 1.0727. If the decline continues, the pair will be able to break through and gain a foothold below the 1.0685 level. In this case, the asset is likely to continue to decline with a target at the minimum level of April 16. When updating the extremum, the next target becomes target zone 2 in the range 1.0561 - 1.0544.For purchases, a change in the trend direction is necessary, the first sign of which will be a breakthrough and consolidation of the pair above the resistance of 1.0739. In this case, the upper limit of the 1.0878 - 1.0853 area becomes the target of buyers.

FOREX Fundamental analysis for EUR/USD on April 29, 2024No matter how much external factors drown the euro, the single currency still pops to the surface like a float. Logically, the quarterly PCE data in the GDP report and the March personal consumption expenditure index should have moderated the strength of EURUSD buyers. However, both times they revived after a seemingly decisive collapse. Yes, the US stock indexes helped the euro through currency correlation, but the main positive is the idea that the ECB may be less aggressive than previously assumed. If this is the case, then data on European inflation may stir up forex currency trading more than the Fed meeting or employment statistics in the United States.Inflation in the United States and the Eurozone are different phenomena, and their growth should be dealt with in different ways. As Christine Lagarde rightly noted, the ECB is independent of the Federal Reserve, and the approaches of Central Banks to solving the same issue may differ. Indeed, price dynamics in the New and Old World have their own characteristics. In the United States, this is a story of massive fiscal stimulus and bloated budget deficits. In the Eurozone, the exchange rate suffered from a sharp rise in energy prices after Russia's invasion of Ukraine. Unsurprisingly, the euro is sensitive to oil prices, and rumors of a possible truce between Israel and Hamas, as well as falling Brent prices, allowed EURUSD to partially recover from the blow caused by the release of PCE in the United States.And although the members of the ECB's Governing Council talk about the regulator's own mission, the markets overestimate the trajectory of the deposit rate, focusing on the United States. If earlier they predicted a decrease in the cost of loans in 2024 by 88 basis points, by the end of April this figure had decreased to 70 basis points. At the beginning of the year, it was 163 basis points. Inflation in the Eurozone, unlike in the United States, continues to slow down. Interestingly, derivatives also reduced the forecast for the Bank of England from 56 basis points to 44 bp, which confirms the dependence of other regulators on the Fed.Despite the fact that Bloomberg expects Eurozone consumer prices to rise by the same 2.4% year-on-year in April as in March, inflation may actually accelerate. According to the World Bank, the commodity market index will decrease by 3% in 2024 and by 4% in 2025, but will remain 38% above the average level of 2015-2019. This will keep inflation high and prevent central banks from cutting rates as quickly as they would like. everything will suffer from this.Support from US stock indexes, a decrease in escalation in the Middle East and the prerequisites for a slower easing of the ECB's monetary policy do not allow the euro to sink. EURUSD is expecting an extremely volatile week, but we still prefer selling when the pair rises towards 1.08 or forming short positions when the price returns below the support of 1.07.Technical analysis for EUR/USDEUR/USD is testing the resistance area of 1.0739 - 1.0685. In the short term, the trend remains "bearish", so we are looking for entry into short positions with the main goal in the area of the minimum for April 16. To start selling, you should wait for the formation of the appropriate signals.If, nevertheless, the resistance of 1.0739 is broken by buyers, and the American session closes higher, then the trend direction will change to an upward one. In this case, starting from Tuesday, we will look for an entry into purchases with a target within 1.0878 - 1.0853.

FOREX Fundamental analysis for EUR/USD on April 23, 2024The head of the French Central Bank, Villaroy de Galo, argues that the conflict in the Middle East will not affect the ECB's determination to cut rates in June. However, a downturn in geopolitical tensions could change the outlook for the US dollar. The volatility of Brent contributed to the growth of the dollar as a defensive asset. Now, when oil prices are declining, the sale of dollar assets begins. Discussions that most of the factors negatively affecting the euro have already been taken into account in the EURUSD rate contribute to the stabilization of this currency pair with increasing correction risks.Bank of America believes that three expected ECB rate cuts in 2024 have already been reflected in the exchange rate of the single currency. If the European Central Bank takes less drastic measures regarding monetary policy, by the end of the third quarter, the EURUSD rate will rise to 1.1, and by the end of the year to 1.12. Provided that the Fed cuts the federal funds rate twice, as markets expect and as Black Rock analysts predict. And this opinion deserves close attention.According to Bloomberg, Black Rock and similar companies currently manage assets of $43.5 trillion, which is twice as much as those of credit institutions. We can say that they largely shape forex currency trading. As for the views of Bank of America, it is assumed that if the rate is kept at 5.5%, EURUSD is quite capable of going down to 1.05 and below.The further dynamics of the main currency pair will depend on how the Fed and ECB rates change. At the end of April, it is worth paying attention to the elaboration of arguments in favor of the sustainability of the greenback. This is not only related to oil. There is an active discussion about how realistic it is to increase the yield of 10-year US bonds to the level of 5% and above. However, to continue the rally, it is necessary that the federal funds rate remain at 5.5% or even higher.Morgan Stanley warns about the risks of currency inflation. A large discrepancy in the monetary policy of the ECB and the Fed may lead to a strong weakening of the euro against the dollar, which may increase inflation risks. Therefore, the ECB may not cut rates as actively as the market expects.The greenback can be supported by statistics on US GDP for the first quarter. The US economy has been growing by 2% or higher for the seventh consecutive quarter, which indicates its resistance to a 525 basis point rate hike. However, behind this sustainability there are significant fiscal incentives that contribute to the growth of government spending, and this cannot last forever.We believe that EURUSD needs time to assess whether all the factors affecting the EA dollar have already been taken into account by quotes. This may lead to temporary stabilization in the range of 1,061-1,071. At the same time, today's statistics on business activity indices can shake the volatility of currency pairs.Technical analysis for EUR/USDEUR/USD continues to trade in a downtrend with a target at the low of April 16. If the pair can gain a foothold below the extreme, then the next target of the "bears" becomes Target zone in the range 1.0561 - 1.0544. We continue to hold short positions open from resistance (A) 1.0693 - 1.0685.The cancellation of the main sell scenario will be the consolidation of the pair above the maximum of April 18. In this case, we are waiting for the development of an upward correction to the resistance (B) 1.0739 - 1.0727. The trend line also runs here, which increases the importance of resistance. After testing the zone, it will be possible to search for entry into short positions.

FOREX Fundamental analysis for EUR/USDThe decrease in tension in the Middle East has breathed new forces into the euro. In the previous case, when EURUSD reached parity in 2022, an energy crisis broke out in Europe, and a possible war between Israel and Iran, further raising energy prices, could seriously undermine the Eurozone economy, which is dependent on fuel imports. This time, Tehran is minimizing the consequences of rocket attacks from Jerusalem, which indicates its reluctance or unwillingness to take revenge. The main currency risk has started to recover, but will the bulls have enough strength for a prolonged correction?EURUSD is holding higher at 1.06, but talk of a collapse of the pair to parity is not abating. The rates on options, at which the equality of the euro and the US dollar will be fixed, are growing. According to Bank of America estimates, the probability of a pair testing this pivot level over the next 6 months is 12%, although no one considered this option at the beginning of the year.The reason for this was a significant change in investors' perception of the prospects for US GDP and the dynamics of the interest rate of the Federal Reserve Fund (FRF). If Bloomberg's autumn forecasts for 2024 assumed a slowdown in the American economy to 0.9%, then the recent IMF forecast indicates growth of 2.7%, which is twice the forecasts of the nearest competitor from the G7 — Canada. At the beginning of the year, derivatives assumed 6-7 acts of monetary expansion of the Federal Reserve Fund, but now they are talking about 1-2. Moreover, they are more inclined to one rate cut. The possibility of the Fed not changing interest rates at all this year is also being actively discussed.It is clear that those who held short positions on the US dollar at the beginning of 2024 are currently the main buyers of the US currency. Vanguard talks about the stable strength of the US dollar, UBS Asset Management predicts its further growth, and Wells Fargo, yesterday's "bear" of the USD index, has already turned around.Although EURUSD quotes were affected by the escalation of the geopolitical conflict in the Middle East and immediately went up with the stabilization of the situation, other factors determining the position of sellers remain in effect. The expected expansion of US GDP by 2.3% in the first quarter, according to Reuters forecasts, makes us think again about the strength of the American economy. The actual data may be even higher, as the leading indicator of the Atlanta Federal Reserve shows +2.9%, and Goldman Sachs gives +3.1%.On the other hand, a slowdown in the PCE index, the Fed's preferred measure of inflation, according to Citigroup, may lead to an expansion of acts of monetary expansion from 1-2 to 2-3, which will put pressure on the US dollar.The monetary policy of the Federal Reserve continues to be a key factor in forex currency trading and continues to depend on data. Therefore, the markets need to be patient and wait for new macroeconomic statistics for the States. The consolidation of EURUSD in the range of 1.061-1.071 is most likely, however, we will sell on each rise.Technical analysis for EUR/USDEURUSD maintains a downward trend towards the nearest target at a low on April 16. If this support is broken, the pair will go to the Target zone 2, 1.0561 - 0.0544. To enter the sale, we recommend waiting for the asset to recover to the resistance area (A) 1.0693 - 1.0685 and resistance (B) 1.0739 - 1.0727.The signal for buying EURUSD will be a breakthrough and consolidation above the resistance area (B). In this case, the short-term trend will change to an upward direction, and the upper Target zone 1.0878 - 1.0853 will be the target of the "bulls".

AUD/USD is growing moderately, developing the upward momentum of the previous session, during which the pair successfully pushed off from local lows on November 14, 2023 and is currently testing the 0.6445 mark for an upward breakout. Meanwhile, market participants are analyzing the March report on the Australian labor market published on Thursday.The report notes a decrease in the employment rate by 6.6 thousand jobs after a significant increase of 117.6 thousand in the previous month, which is slightly lower than analysts' expectations of 7.2 thousand. Full-time employment increased by 27.9 thousand, while partial employment decreased by 34.5 thousand. The unemployment rate rose from 3.7% to 3.8%, with expectations of 3.9%, and the share of the labor force in the total population decreased from 66.7% to 66.6%.At the same time, the US dollar received good support from Jerome Powell's comments. Although the exact timing of the launch of the program to reduce the cost of borrowing was not specified, the head of the Fed stressed that the national economy will need some time to reach the 2.0% inflation target. This led to a revision of investors' forecasts for the date of the first interest rate adjustment in the current year. An easing of monetary policy in September seems to be the most likely scenario, but a change in course at the end of 2024 is also possible. It is expected that there will be no more than two interest rate cuts this year.On the daily chart, the Bollinger band indicator shows a moderate decrease while. The MACD is trying to move to growth, while at the same time maintaining a sell signal. Stochastic, having retreated from the lows, began to turn up and is trying to break through the 20% level and get out of the oversold area.We consider purchases after a confident breakdown of the 0.6456 level up with a target of 0.6524. We will set the stop loss at 0.6420.A rebound from the resistance of 0.6456, followed by a breakdown of the 0.6420 mark down, will be a signal to form short positions with a target of 0.6356. We will place the stop loss at 0.6456.