FOREX Fundamental analysis for EUR/USD on April 29, 2024
No 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/USD
EUR/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 May 15, 2024No matter what statistics come out, investors will always hear what they would like to hear. Instead of reports of a 0.5% (mom) increase in producer prices in April, they talk about a 0.1% decrease in March. Instead of Jerome Powell's assurances about the extremely low probability of a rate hike in 2024, they heard that the Fed would be patient. Claes Knoth, head of the Bank of the Netherlands, announced a possible acceleration of inflation in Europe, and this, for fear of not being in time, pushed players to urgent purchases and sent the Nasdaq Composite to new records, and the EURUSD to five-week highs.According to an analysis by S&P Global Investment Manager Index, risk appetite has reached its highest level since the end of 2021. A survey of asset managers by Bank of America showed that the market has seen the maximum number of "bulls" over the past 2.5 years. Unsurprisingly, the risks of a reversal in the euro are now at their highest since February, and the weekly indicator of the US dollar has fallen below zero for the first time in two months. In such circumstances, safe haven assets are not popular, and investors are starting to look for other methods of forex trading.The greenback was not helped by Jerome Powell's statement that he was less confident in a further slowdown in price growth, and that it was necessary to wait for developments while carefully monitoring the dynamics of inflation. On the contrary, his remarks that the rates are already high enough to weaken demand only provoked the EURUSD bulls. A prolonged hold on rates at 5.5% could lead to a further slowdown in the US economy.In fact, overdue credit card payments in the United States have reached their highest level in many years, and recent economic data is more upsetting than encouraging. The United States stands in stark contrast to the Eurozone, where the economic surprise index remains stable. Reducing the gap in economic growth between the Old and the New World is becoming an additional incentive for buyers of EURUSD.The new US tariffs on $18 billion worth of Chinese goods announced by the White House do not help the dollar, although they may be a harbinger of trade wars. Customs duties on electric vehicles increased from 25% to 100%, on semiconductors and solar panels — from 25% to 50%, on steel and aluminum products — from 7.5% to 25%. Interestingly, Biden's team does not believe that such measures will lead to an acceleration of inflation, unlike Trump's intentions to impose duties of 10% on all imported products. U.S. Treasury Secretary Janet Yellen warned that China could respond. And Beijing does not deny this possibilityIn short, the thirst for profit overcomes the risks of trade wars, and Jerome Powell's words only fueled interest in the April consumer price report in the United States. The reaction to it may be completely different than to the output of PPI. If the indicator exceeds forecasts, this may reduce the fuse of the EURUSD bulls and force them to take profits, which, in turn, will cause a corrective decline. But if inflation slows down, it will only strengthen interest in the euro and push the pair to the $1.108 mark.EUR/USD Technical AnalysisYesterday, EUR/USD was on the news on US manufacturing inflation (PPI). updated the maximum of May 3. The next target of buyers in the further development of the short-term uptrend is the target area of 1.0878 - 1.0853. If the designated zone is also broken up, then the asset will rush to the golden zone in the range of 1.0945 - 1.0937.It is advantageous to look for new purchases of the instrument on a downward correction, starting from strong support levels of the regions 1.0744 - 1.0735 and 1.0702 - 1.0689. The first target for long positions will be today's maximum. 
FOREX Fundamental analysis for EUR/USD on May 14, 2024Any economy is cyclical. For a long time, rising US inflation has kept rates high and supported the US dollar. However, it also reduced the real incomes of citizens and slowed down GDP growth. As soon as signs of a slowdown began to appear in the economy, optimism revived in the market. Investors are again waiting for a rate cut by the Federal Reserve System (FRS), as it was at the beginning of the year. This is a bad sign for the EURUSD bears.Goldman Sachs believes that in forex currency trading, before the release of the consumer price report in the United States, FOMO reigns - the fear of missing the opportunity to enter or the fear of lost profits. Investors are ready to buy stocks and bonds like hot cakes, which could lead to the rise of the S&P 500 index to new records and lower bond yields. This is the opposite of what happened before mid-April. In the second month of spring, the stock index showed its worst result since autumn, and bond rates rose to November highs, which supported the greenback through currency correlation.Market trends have changed dramatically, and the key to this is that after three months of growth in the consumer price index (CPI), investors expect it to slow down. This will lead to the resumption of the idea of large-scale monetary expansion by the Fed, in contrast to the two monetary policy easing acts expected by derivatives in 2024.Even the expectation of big steps by the European Central Bank (ECB) does not help the sellers of EURUSD. Goldman Sachs and Bloomberg forecast a 75 basis point reduction in the deposit rate to 3.25% by the end of December. Investors are scared by the divergence in monetary policy, which can lead to problems in the Eurozone due to the rising cost of imports, especially for an economy with high energy dependence, such as the European one.However, I will not agree with this. The problem of energy dependence would become acute if gas prices were as high as in 2022. At the moment, they are more than 10 times lower than they were then. The ECB has long hinted at a reduction in the deposit rate, so investors have already taken this aspect into account and are not worried about the weakness of the economy. Well, due to the fact that the factor of monetary policy easing has already been taken into account in prices, you should not expect a sharp decline in the EURUSD at the output of the actual data.In addition, high inflation in the United States constrains the growth of the American economy, while low inflation levels in the Eurozone stimulate it. The labor market remains strong, and real wages are rising, which contributes to the expansion of GDP. It is no coincidence that Bloomberg experts have raised the forecast for the Eurozone economy to 0.7% in 2024.It can be said that the hypothesis of a change in the direction of the EURUSD trend, expressed after the release of employment data in the United States, is beginning to be implemented. The slowdown in the April producer and consumer price indices in the United States will strengthen purchases of EURUSD formed from $1,073. We consider $1,108 as the nearest target. 
FOREX Fundamental analysis for EUR/USD on May 13, 2024In order for American exceptionalism to lose its relevance and stop supporting the dollar in forex currency trading, it is necessary not only to slow down economic growth in the United States, but also to return inflation to a decline. Bloomberg economists' forecast of a slowdown in consumer price growth from 3.5% to 3.4% year-on-year and from 0.4% to 0.3% month-on-month was an incentive for further purchases of the EURUSD pair. However, the deviation of actual indicators from the forecast can radically change the fate of the main currency risk.The increase in inflation in the first quarter forced investors to reconsider their views on the prospects for the federal funds rate. If at the end of 2023 derivatives assumed 6-7 monetary expansion assets in 2024, then by the beginning of May this figure had decreased to 1-2. The decline in labor market activity has prompted investors to think that the policy easing cycle will begin in September, and the Fed will cut the rate from 5.5% to 5%. The April inflation data will be a kind of test point for this scenario.A signal that markets are still focused on consumer price indices (CPI) and personal expenses (PCE) in the United States is the growth of EURUSD against the background of accelerating inflation expectations from 3.2% to 3.5%. While the consumer sentiment index fell to its lowest level in the last 6 months. And this is quite understandable.The increase in inflation and the reduction in consumer spending contradict the forecast of a slowdown in the pace of price increases with an increase in real incomes. This may lead to a further decrease in the rate of GDP expansion in the second quarter, which will undermine the factor of American exceptionalism and put pressure on the US dollar.At this time, the rest of the world is giving positive signals, and Europe's economies are strengthening faster than expected. Eurozone GDP grew by 0.3% in January-March, and the British equivalent even by 0.6%. These are the best figures since 2021. After a rapid increase in imports in April, the rise in inflation in China confirms the acceleration of domestic demand. The global economy is moving away from American exceptionalism and moving towards synchronization. This is good news for the euro.However, what about the fact that Europe is moving towards monetary expansion faster than the United States, which in theory should put pressure on the currency of the Old World? The dollar is not only an American currency, but also a world currency. Its share in the gold and foreign exchange reserves of the world's countries is 58%, and 88% of all transactions in the Forex market are carried out with its participation. Therefore, the processes taking place in the United States are more important than the intentions of the ECB.So far, the assumption of a change in the direction of the EURUSD trend remains in force, but requires confirmation, primarily in the form of a slowdown in inflation in the United States. Before the release of an important release, there is a high probability of consolidation of the pair in the range of 1,072-1,080. Our forex trading strategy involves purchases with a decrease in the asset.EUR/USD Technical Analysis for EUR/USDEUR/USD is in a short-term uptrend. The pair has pushed off from the support area 1.0728 - 1.0720 and is heading towards the maximum for May 3. If the extremum is broken, then we assume a further increase in quotations to the target area of 1.0878 - 1.0853.In case of a transition to a downward correction, it will be possible to count on an update of the minimum from May 9 and a decrease in the pair to the area of 1.0686 - 1.0674. After reaching the key support, we will consider purchases with a target of 1.0810. 
Trading idea for USD/JPYDuring Friday's trading session, USD/JPY remains near the level of 155.50. Moreover, this stability is observed for the second day in a row. The reason is simple - the lack of important economic news from the United States and Japan, as well as the indecision of traders due to fears of possible interventions from the Bank of Japan.The head of the Bank of Japan, Kazuo Ueda, stressed that the regulator is ready to take measures to strengthen the national currency, as a weak yen has an impact on consumer prices. He also mentioned a possible early increase in interest rates if inflation growth continues in the near future. Analysts believe that last week the Bank of Japan conducted two currency interventions worth $ 50 billion, but there were no official comments on this issue. Nevertheless, it has long been clear that only the intervention of the regulator could prevent further weakening of the yen. The Bank of Japan and the Ministry of Finance of the Land of the Rising Sun have repeatedly stated their readiness to take measures to reduce speculative pressure on the yen. The minutes of the Central Bank's meetings show that the majority of Council members adhere to a "hawkish" course, calling for further rate increases. Analysts are confident that the regulator will carry out an act of monetary restriction at least once more, most likely in the second half of this year. Macroeconomic statistics from Japan, published last week, did not have a significant impact on the dynamics of the pair. The index of leading indicators decreased slightly in March, as did the index of the current situation from Eco Watchers.Given the rhetoric of the Bank of Japan, its willingness to resist the actions of speculators and its intention to continue raising interest rates, the potential for a weakening of the Japanese yen is limited. In such circumstances, the USD/JPY pair is better considered in the perspective of a long-term decline.To sell USD/JPY, it is recommended to include an order in the trader's transaction diary:Sell-Stop 155.20 Take-Profit 153.00Stop-Loss 155.90. 
FOREX Fundamental analysis for EUR/USD on May 10, 2024After a decrease in the number of open vacancies in March to a three-year low and an April slowdown in employment rates to the lowest level in six months, an increase in the number of applications for unemployment benefits in the United States to a maximum of eight months convinced investors of a slowdown in the American labor market. This increased the probability of two cuts in the federal funds rate in 2024 from 52% to 60%, reduced Treasury bond yields, returned the S&P 500 to the zone of record highs, which, through currency correlation, allowed the EURUSD bulls to go on the attack.Although applications for unemployment benefits are a weekly and highly fluctuating indicator, recent data indicate a cooling of the American economy. If the April inflation and retail sales data confirm this, the dollar will lose its position in forex currency trading.Even the Bank of England's "dovish" reversal did not help the EURUSD bears. Andrew Bailey, the governor of the Bank of England, highlighted progress in the fight against inflation and suggested that the REPO rate could fall faster than financial markets expected. The projected scale of monetary expansion in 2024 for the Bank of England is 55 basis points, for the ECB – 70 basis points, and for the Fed – 43 basis points.The upcoming slowdown in the US economy may be a strong argument in favor of buying EURUSD. The eurozone looks more dynamic compared to the United States. Its GDP is growing from a low base, while the growth of the US economy is slowing down from high rates. This reduces the divergence in economic growth, which contributes to the continuation of the euro rally against the dollar.Although the market already takes into account the earlier start of the ECB's monetary expansion compared to the Fed, it is still unclear whether the ECB will continue easing in July. Luis de Guindos, vice president of the ECB, stressed that the regulator does not seek a specific plan, but will make decisions based on data.Thus, the bet on reducing the gap in economic growth between the US and the Eurozone is working: EURUSD is sensitive to the deterioration of US macroeconomic statistics, as shown by data on applications for unemployment benefits. However, the main risks for breaking the EURUSD downtrend remain the presidential elections and the acceleration of inflation in the United States. Therefore, in anticipation of data on consumer and production price indices, consolidation of the euro against the dollar is possible. We are holding long positions on EURUSD, formed on the rebound from support at 1.0730.EUR/USD Technical Analysis for EUR/USDEUR/USD is growing in the format of a short-term uptrend. The target of buyers is the maximum from May 3. The intermediate target is 1.0793 resistance. If the pair updates the maximum on May 3, then the Target area of 1.0878 - 1.0853 will be the next target.The trend boundary has moved to the range 1.0689 - 1.0674. If this zone is reached during a corrective decline, then from here we will look for an entry into purchases with a target of 1.0793.To change the trend direction and form short positions, sellers need to break through and consolidate below the 1.0674 level. 
FOREX Fundamental analysis for EUR/USD on May 7, 2024The Fed is not going to coordinate the course of monetary policy, relying only on the report of the US labor market. The president of the Federal Reserve Bank of Richmond, Thomas Barkin, believes that the current rate level is sufficient to return the PCE index to the target level. But, in case of overheating of the economy, the Fed knows how to react. If the economy continues to slow down, the regulator will have enough flexibility to prevent a freeze in GDP. In other words, the Fed feels calm and has no plans to change anything. But, that's for now.Forex currency trading is highly dependent on employment data in the United States, which, after the release of the April report, led to the consolidation of the EURUSD even with a favorable background for the euro. The S&P 500 is growing, and government bond yields are declining, in particular due to upcoming auctions, where high demand is expected. This means that interest rates on bonds should fall even lower, which, through the correlation of currencies and rates, puts pressure on the US dollar.On the contrary, the euro is starting to react to positive news. According to World Trade Organization (WTO) estimates, international trade in goods, after a 1.2% decline in 2023, will grow by 2.6% in 2024. The IMF forecasts growth in world trade, including services, by 3%, and the OECD - by 2.3% this year and 3.3% next. Paris believes that positive developments have already proved useful for the export-oriented economy of the Eurozone, which confirms the growth of the indicator in the first quarter by 0.3%.The positive international trade data is not the only factor contributing to the growth of EURUSD. As the US GDP slows and the associated dollar losses, the euro is being helped by the synchronization of global economic growth. Consumer activity in the Eurozone and China is expected to finally accelerate due to the gradual elimination of concerns about the war in Ukraine, the energy crisis and the long-awaited exit from the crisis associated with the COVID-19 pandemic.For a long time, the ECB's forecasts for consumer activity have not been justified. In my opinion, the fears of Europeans, who tend to save more than spend, are to blame for this. However, time heals wounds. Gradually, the world is getting used to the armed conflict in Eastern Europe, and energy prices are not alarming. It's time to fork out. With the slowdown in US GDP growth, the acceleration of its European counterpart becomes a reason to buy EURUSD.Most likely, the divergence of economic growth between the Old and the New World will no longer support the "bears" of the main currency pair so much, and the growing likelihood of monetary expansion by the Fed will create pressure on the US dollar. The EURUSD correction has a good chance of turning into a reversal of the downtrend, although the risks certainly remain.Among them, the acceleration of inflation in the United States should be highlighted, which will force the Federal Reserve to keep rates at the current level for longer than planned. As well as the potential victory of Donald Trump in the presidential election, which would jeopardize the improvement of international trade. For now, it makes sense to buy EURUSD after a breakout of resistance at 1.079 or after a rebound from support at 1.074 and 1.073.EUR/USD Technical analysis for EUR/USDThe EUR/USD exchange rate is declining, correcting the short-term uptrend. A potential target for the bears is the support area (A) 1.0728 - 1.0720. After testing this zone, we suggest looking for points for new purchases of the pair with a target at the maximum from May 3.If, nevertheless, support (A) is broken and EUR/USD is fixed lower, then the corrective decline will continue to the support area (B) 1.0686 - 1.0674. There is also a trend line here, from which we will also consider purchases with the same purpose at the maximum of May 3. 
FOREX Fundamental analysis for EUR/USD on May 3, 2024The fight against inflation turned out to be less difficult than expected, even taking into account the OECD estimates. The organization raised its global GDP forecast for 2024 from 2.9% to 3.1% and expressed confidence in a further slowdown in inflation, which will enable Central Banks to begin a gradual easing of monetary policy. The OECD highlighted the strength of the American economy, which is ahead of the European one. Nevertheless, the EURUSD is strengthening ahead of an important report on the US labor marketAccording to the OECD comments, "less hard" means fewer job losses. Interestingly, Jerome Powell also drew attention to the labor market. In his opinion, the Fed will lower the federal funds rate if the unemployment rate starts to rise rapidly. Bloomberg forecasts show that the unemployment rate in April will be 3.8%, but can the Fed know something that others don't? Could the EURUSD rally before an important event be the result of a new wave of rumors?The euro was supported not only by an increase in the forecast of global GDP from the OECD, which is good news for pro-cyclical currencies, but also by neutral comments from members of the ECB Governing Council. One of the main "pigeons", the chairman of the Bank of Greece, Yannis Stournaras, now assumes that the ECB will cut the interest rate in 2024 not four, but three times. Chief Economist Philip Lane talks about a leisurely approach, about making decisions based on observing and analyzing the dynamics of inflation. However, in his opinion, a reduction in rates is still necessary, since prolonged inactivity can negatively affect the Eurozone economy.From Philip Lane's point of view, although the Fed's actions may have an impact on the ECB's decisions, the main focus of the European Central Bank is on internal factors.Markets expect the European Central Bank to act sooner than the Fed. This will allow the US dollar to strengthen its position in forex currency trading in the next three months. However, then, according to analysts' forecasts, by the end of July, the EURUSD will rise to the area of 1.07, and by the end of October to the level of 1.08.Thus, differences in economic growth between the US and the Eurozone, as well as differences in the timing and speed of monetary expansion of the Fed and the ECB, continue to work on the side of the EURUSD bears. However, alarming signals have already been received about the slowdown in the American economy in the first quarter. Now, dollar supporters are anxiously awaiting the April report on the US labor market.In the previous few months, the employment rate looked too strong. Forecasts by Bloomberg economists suggest a decrease in new jobs from +303 thousand to +242 thousand in April, but even this figure will remain significantly higher than the average before the pandemic. If the actual data turns out to be within the forecasts or slightly better, this may be a reason to sell EURUSD in the direction of 1.064 and 1.06. On the contrary, disappointing statistics will be a strong argument in favor of buying a pair. 
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.