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EUR/USD: is there a reason for growth?

EUR/USD, currency, EUR/USD: is there a reason for growth?

FOREX Fundamental Analysis for EUR/USD on July 11, 2023

Investors are buying EUR/USD on expectations of the end of the Fed's monetary restriction cycle. Inflation is declining, FOMC members periodically talk about the task almost completed. According to forecasts, US consumer price growth is expected to slow down to 3.1% in June and, it would seem, why should tightening financial conditions increase the risks of recession? But perhaps the EUR/USD rally is based on elementary Greed.

From the lows of October, EUR/USD has strengthened by 15.5%. And all thanks to negative forecasts predicting a near collapse of the US economy and, as a consequence, expectations of a dovish reversal. In addition, Europe was not hit by the horrors of the energy crisis, which significantly improved the prospects of the European economy. Investors were also waiting for a new "Chinese" miracle and hoped for a quick recovery of the Celestial Empire's economy after the pandemic restrictions.

Unfortunately, the Chinese model did not work. China's economic indicators show weak domestic demand, which has a negative impact on economic growth. In the Eurozone, the economy has plunged into recession, unlike the US, which demonstrates stability and confidence.

Thus, the drivers of EUR/USD growth have dried up, although the pair continues to strengthen solely on the expectations of the end of the Fed rate hike cycle. And although Jerome Powell outlined further tightening of the monetary policy course, the forecast of inflation decline and a number of statements of FOMC members allowed the "bulls" to consolidate above 1.10.

Investors do not want to hear the statements of the "hawks" of the Open Market Committee about the need for multiple rate hikes by the end of the year so that inflation not only comes down to the 2% target, but also can stay in this area for some time.

In other words, markets are hearing what they want to hear and ignoring the lack of a fundamental reason for EUR/USD to rise. Prices are already pricing in a decline in US CPI to 3.1% and core inflation to 5%. I believe the release of the report will set the stage and suggest selling the pair on the facts. According to John Murphy's technical analysis, short positions can be opened from the levels of 1.102 and 1.106.

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AUD/USD: the Australian economy is recovering steadily
AUD/USD, currency, AUD/USD: the Australian economy is recovering steadily AUD/USD analysis on July 15, 2024The AUD/USD pair is correcting upwards to the level of 0.6775. The strengthening is carried out against the background of the weakening of the US dollar, although the Australian currency remained almost at the same positions.In May, tourism in Australia showed growth for the first time in five months. The number of short-term arrivals reached 600.78 thousand, which is 17.3% more than last year, and the total number of arrivals of residents and non-residents amounted to 1.478 million, an increase of 14%. According to forecasts by the Australian Bureau of Statistics (ABS), the total number of arrivals may exceed 1.530 million in June. If this trend continues, the pressure on the economy will decrease by the end of the third quarter. Labor market data will be released on Thursday at 03:30 (GMT+2). According to forecasts, unemployment is expected to rise from 4.0% to 4.1% and full-time employment growth will slow from 39.7 thousand to 20.0 thousand. The stability of the sector in the context of tight monetary policy of the Reserve Bank of Australia (RBA) reduces the likelihood of interest rate changes this year.The US dollar is trading at 103.80 on the DXY index. In June, the producer price index increased by 0.2% month-on-month and from 2.4% to 2.6% year-on-year, which may contribute to an increase in consumer inflation. Additionally, data from the University of Michigan put pressure on the USD: in July, the consumer expectations index fell from 69.6 to 67.2 points, and the consumer sentiment index — from 68.2 to 66.0 points.AUD/USD Technical analysis for todayOn the daily chart, the pair is approaching the resistance line of the ascending channel with dynamic boundaries of 0.6870–0.6720.Technical indicators give buy signals: fast EMAs on the Alligator are moving away from the signal line, expanding the range of fluctuations, and the histogram of the awesome oscillator indicator is growing in the buy zone.Long positions can be opened when the price rises and fixes above the level of 0.6790 with a target of 0.6870. We recommend setting the stop loss at 0.6750.Sales are advisable when the price is reduced and fixed below the level of 0.6750. The nearest target is at 0.6680. We will place the stop loss at 0.6800.
Jul 15, 2024 Read
Forex analysis and forecast for USD/CAD for today, July 15, 2024
USD/CAD, currency, Forex analysis and forecast for USD/CAD for today, July 15, 2024 USD/CAD is testing the 1.3657 level to break down before the release of important macroeconomic data from Canada.Tomorrow at 14:30 (GMT+2), the June inflation report will be published, which will play a key role in the Bank of Canada's monetary policy decisions. The annual consumer price index is expected to decrease from 2.9% to 2.6%, and the monthly indicator will accelerate from 0.1% to 0.3%. Core inflation is projected to decrease from 1.8% to 1.6% on a monthly basis and from 0.6% to 0.4% on an annual basis. This may allow the Bank of Canada to move to a more lenient policy, which will support the economic recovery by lowering interest rates, stimulating consumer spending and investment. On the same day, data on the volume of new home construction will be published, the indicator of which is likely to decrease from 264.5 thousand to 260.0 thousand, which may put pressure on the Canadian dollar.Analysts believe that the Bank of Canada will act more decisively than the US Federal Reserve on the issue of lowering rates. The Fed is expected to start cutting rates in September, with two adjustments before the end of the year, while the Canadian regulator will reach the level of 3.00% by the end of next year, while in the United States only by the beginning of 2026.On the daily chart, technical indicators give preference to sales. The Alligator indicator turns the moving averages down. Awesome oscillator forms descending bars in a negative rangeShort positions can be opened with a confident breakdown down to the 1.3600 level with a target of 1.3480. We will place the stop loss at 1.3680.Purchases will be relevant when the 1.3680 level breaks up. The target is -1.3780. We will make a stop loss of 1.3620.
Jul 15, 2024 Read
EUR/USD: an attempt on Trump could strengthen the dollar
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Jul 15, 2024 Read
Forex analysis and forecast for GBP/USD for today, July 12, 2024
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Jul 12, 2024 Read
EURUSD: the market is talking about three Fed rate cuts
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Jul 12, 2024 Read
AUD/USD: RBA makes no sense to cut the rate
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Jul 11, 2024 Read
Forex analysis and forecast for USD/JPY for today, July 11, 2024
USD/JPY, currency, Forex analysis and forecast for USD/JPY for today, July 11, 2024 USD/JPY demonstrates multidirectional movements, testing the level of 161.70 again. Yesterday, growth attempts failed due to a lack of drivers for significant movement.Investors are closely following the statements of the head of the US Federal Reserve, Jerome Powell, who spoke to members of the House of Representatives of Congress the day before. Powell stated his readiness to continue reducing the Fed's surplus balance, which increased significantly during the coronavirus pandemic. However, in his opinion, the regulator will not rush to avoid speculation in the market. US inflation data for June will be released today at 14:30 (GMT+2). Analysts expect a decrease in the annual consumer price index from 3.3% to 3.1%, which may increase the likelihood of monetary policy easing by the end of the year. On a monthly basis, the indicator is expected to grow to 0.1% after the zero dynamics in May.Japanese statistics published today showed an annual increase in orders for engineering products in May by 10.8%, which significantly exceeded forecasts of 7.2%. On a monthly basis, there was a decrease of 3.2%, with a growth forecast of 0.8%. The price index for corporate goods in June decreased from 0.7% to 0.2% on a monthly basis, which was lower than the predicted 0.4%, but in annual terms the indicator increased from 2.6% to 2.9%, in line with expectations. These data, along with the strengthening of the yen and rising prices for imported raw materials, strengthen investors' confidence that the Bank of Japan can begin to tighten monetary policy. According to Reuters sources, the regulator may adjust economic growth forecasts and confirm that inflation has reached 2.0%.The Bollinger Band indicator on the daily chart shows moderate growth, although the price range between the lines is narrowing, which indicates mixed dynamics in the short term. The MACD indicator is trying to turn up, forming a buy signal. Stochastic is also growing, but is rapidly approaching maximum values.It is recommended to open long positions after a confident breakdown up to the level of 162.00 with a target of 163.00. We put the stop loss at 161.30.When bouncing down from the level of 162.00, followed by a breakdown and consolidation of the price below the level of 161.30, we regard it as a signal to form sales with a target of 159.92. We place a stop loss at 162.00.
Jul 11, 2024 Read
EURUSD: ECB may refuse to cut rates
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Jul 11, 2024 Read
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