FOREX Fundamental analysis for EURUSD on March 23
The Fed has raised the interest rate for the ninth time, but it has not become a factor in strengthening the dollar. EUR/USD went up strongly after the Fed's verdict, which shows that euro buyers have a strong disposition.
Investors understand that the cycle of the rate increasing by the American regulator is in its final stage, especially amid banking crisis, the reason of which was the tightening of the Fed's monetary policy.
Moreover, during the press-conference Jerome Powell did not rule out the possibility that the March increase in rates will be the last one, as many FOMC members suggested making a pause in monetary restriction.
FOMC Federal Funds Rate Projections
The idea of a "dovish" spread has returned to the markets, especially since the inversion of the yield curve, which Jerome Powell believes is the best indicator of a recession, clearly points to an economic slowdown.
The dynamics of the yield curve in the U.S.
There was a similar pattern in forex trading in the spring when the idea of a Fed rate change pushed EUR/USD and other risky assets higher. If we remember the improving economic situation in the Eurozone, the deposit rate hike from the ECB and the run-up in China, further strengthening of the Euro against the weakening greenback is beyond doubt.
We consider buying EUR/USD with targets at 1.12 and 1.14.
USD/CAD analysis on April 17, 2024USD/CAD is adjusted near the level of 1.3820 against the background of changes in the dynamics of the US dollar, while Canadian macroeconomic statistics did not support the national currency.Thus, in March, the consumer price index increased by 0.6% on a monthly basis and from 2.8% to 2.9% on an annual basis, and the base indicator, excluding food and fuel prices, adjusted by 0.5% (mom) and from 2.1% to 2.0% (YoY), which corresponds to according to analysts' forecasts.The US dollar index reached a record high of 106.10 after the publication of March retail sales data. The volume increased by 0.7% on a monthly basis, exceeding preliminary estimates by 0.4%, and jumped from 2.11% to 4.02% on an annual basis, while the base value accelerated from 0.6% to 1.1%. In addition, industrial production over the same period increased by 0.4% on a monthly basis and moved out of the negative zone to zero.On the daily chart, USD/CAD moves away from the resistance line of the ascending channel with dynamic boundaries of 1.3750–1.3500.Technical indicators on Daily confirm the purchase/ the range of EMA fluctuations on the Alligator indicator expands upwards, and the histogram of the awesome oscillator indicator forms corrective bars above the neutral level.Long positions can be opened after the price is fixed above 1.3850. The nearest target will be 1.3960. We set the stop loss at 1.3800.Sales will be relevant after the price is fixed below the support level of 1.3780. Here, the target is 1.3610. We place the stop loss at 1.3840. 
The outlook for USD/JPY looks mixed. The pair is stabilizing near the level of 154.60. Despite the high interest from buyers, investors are in no hurry to open long positions, expecting a possible intervention by the Bank of Japan in forex currency trading against the background of a critical weakening of the yen. After the historic increase in the interest rate last month, the regulator announced the continuation of a soft monetary policy. At the same time, the Minister of Finance of Japan, Shunichi Suzuki, noted that the monetary authorities are monitoring the situation with the exchange rate of the national currency and are ready to take appropriate action if necessary. In the case of currency interventions, the yen may begin to strengthen rapidly.The yen was supported yesterday by data on Japan's foreign trade, where exports increased by 7.3% in March and imports decreased by 4.9%. The trade balance has reached a surplus of ¥366.5 billion. The national consumer price index in Japan is projected to adjust from 2.8% to 2.7% in March.Today, investors will focus on the publication of the US Federal Reserve's monthly economic report, known as the Beige Book. Inflation data for March will be presented in Japan.On the Daily, the Bollinger Bands are aimed at strong growth, the MACD retains a buy signal. The Stochastic oscillator is flat in the area of maximum values.To form long positions, it is necessary to confidently overcome the resistance level of 155.00 upwards. The target will be 156.00. We will set the stop loss at 154.50.A rebound from 155.00 followed by a breakdown down to the level of 154.50 will serve as a signal to enter short positions with a target of 153.50. In this case, we will set the stop loss to 155.00. 
FOREX Fundamental analysis for EUR/USD on April 17, 2024Appetite comes with eating. After the Fed took the first steps towards a dovish reversal in December, markets began demanding 6-7 rate cuts from the central bank in 2024. However, after the publication of data on March inflation in the United States, investors began to discuss the possible resumption of the monetary policy tightening cycle. Jerome Powell's statement that the Federal Reserve is not considering a rate hike calmed the market, and the EURUSD pair began to strengthen.The head of the Fed and his deputy, Philip Jefferson, said that restraining monetary policy should have more time to assess the effectiveness of its impact. This means that the federal funds rate will remain at 5.5% for longer than previously expected. The central bank is unlikely to cut the rate without a significant weakening of the economy. In light of such statements, expectations for the start of the monetary expansion cycle in June decreased to 15%, in July – to 41%. September remains the main candidate for the start of the process, but the final decision of the Fed will depend on the input data.Strong reports on the labor market, inflation and retail sales in the United States, as well as the "hawkish" rhetoric of FOMC members, push the yield of 10-year treasury bonds up, allowing the dollar index to lead among forex currency indices. The difference in yields between American and German bonds has increased by 30 basis points since the beginning of 2024 to 220 bps. A year ago, this figure was 110 basis points. This is also a bearish factor for EURUSD.The federal funds rate is expected to fall by 41 basis points by the end of December, and the ECB deposit rate by 80 basis points by then. The rhetoric of the ECB Governing Council members supports such market forecasts. Christine Lagarde said that unless there are serious shocks, the Central Bank will ease monetary policy. Most likely, this will happen in the near future. The head of the Bank of France, Francois Villaroy de Galo, expressed the opinion that after the start of the cycle in June 2024, the rate should also be reduced in 2025.The updated IMF forecasts support the euro. According to the fund's analysts, the global economy will grow by 3.2% this year, which is 0.1 more than previously forecast. However, estimates for the Eurozone were reduced by 0.1 points to 0.8%. It seems that the American economy continues to be a priority, which supports the EURUSD bears.The current situation with EURUSD may lead to consolidation or even correction of the pair after the breakout of resistance at 1.065 and 1.0665 levels. However, the ECB's willingness to get ahead of the Fed in the cycle of monetary expansion limits the upward pullback of the EURUSD.Technical analysis for EUR/USDEUR/USD maintains a short-term downtrend. On Tuesday, sellers were able to break through and gain a foothold below the "golden zone"1.0645 - 1.0636. The next target for the bears is the target area 2 between 1.0561 and 1.0544. It is advisable to consider a new entry into sales on correction after testing strong resistance levels, which today are: areas 1.0693 - 1.0685 and 1.0739 - 1.0727. The nearest target for sellers is Tuesday's minimum.An alternative option. If EUR/USD meets the target on Wednesday and updates yesterday's low, then the target correction levels will need to be revised. 
FOREX Fundamental analysis for EUR/USD on April 16, 2024It is unlikely that anything can stop consumers if they want to buy, especially since wage growth is approaching historical highs. A sharp rise in retail sales in the United States has shaken debt and foreign exchange markets, lifting the USD index to highs over the past five months. The higher the demand from consumers, the stronger the economy, and the less likely it is that the Fed will lower the federal funds rate in 2024. This is disappointing news for the EURUSD bulls.In March, retail sales increased by 0.7%, and the underlying index increased by 1.1%, significantly exceeding the expectations of Bloomberg analysts. The data for February were revised upwards, which only fueled the optimism of the assessment of the economic situation in the United States. Goldman Sachs raised its forecast for US GDP in the first quarter from 2.5% to 3.1%, and Jefferies – from 2.2% to 3.1%. The forecast indicator of the Federal Reserve Bank of Atlanta indicates that the economy may grow by 2.8%. In such a situation, the Eurozone, with its weak economic growth, can only envy.UBS believes that the combination of impressive GDP growth and accelerating inflation creates the prerequisites for the return of the Fed's monetary policy tightening cycle. If the situation does not change, the Fed may not only refrain from lowering the rate in 2024, but also begin raising it in early 2025. This could lead to an increase in the rate to 6.5% by the middle of next year, which will be a powerful incentive for the US dollar.It is logical that speculative purchases of the dollar rose to the highs of August 2022. Interest in call options is at the highest level.In the futures market, the probability of the first reduction in the federal funds rate in June is 23%, in July – 48%, and in September – 72%. The probability of two acts of monetary expansion by the Fed in 2024 is estimated as fifty-fifty, although last week the risks of three steps by the Federal Reserve along the path of monetary policy easing amounted to 65%.The situation is further aggravated by the escalation of the geopolitical conflict in the Middle East. Judging by the emergency meeting of the military cabinet, Israel intends to repay Iran for the airstrikes on its territory, which raised the price of Brent crude above $90 per barrel, caused a decline in the S&P 500 index and increased demand for the US dollar as a protective asset.However, if there is no response, as well as if China's macroeconomic indicators turn out to be better than expected, and the IMF's forecasts for the global economy improve, the euro may receive support.Now there are excellent opportunities to sell EUR/USD at high prices with an eye to $1.06 and $1.05. After all, when FOMC members begin to retreat from their plans, the situation can become extremely unpredictable. And this applies not only to EURUSD. The change in the Fed's mood will change the positioning in forex currency trading. Now Mary Daly does not recognize the need for monetary expansion, and John Williams talks about a possible rate cut in the event of a slowdown in inflation this year with the prefix "maybe". But after a while, the Hawks camp may be replenished with new recruits.Technical analysis for EUR/USDThe day before, EUR/USD broke through the Golden Zone in the range of 1.0645 - 1.0636, the next target of sellers is the Target area 2, in the boundaries of 1.0561 - 1.0544. It is advantageous to open new sales on an upward correction, looking for an entry point in the resistance areas 1.0694 - 1.0686 and 1.0740 - 1.0728. Short positions can be formed after the appearance of a reversal signal. The bears' immediate target will be today's minimum. 
FOREX Fundamental analysis for EUR/USD on April 15, 2024Central banks resemble a pack, where the Fed acts as the leader. If one of the regulators decides to deviate from the general course, he and his currency will be expelled. The desire of the European Central Bank for independence led to the collapse of the EURUSD to the minimum values of November last year. Due to the proud statements of the members of the Governing Council that the ECB is not the 13th Federal Reserve Bank of the United States, the euro showed the worst weekly decline since the autumn of 2022.The impact of the Fed's monetary policy extends beyond the United States. The size of the American economy and the role of the dollar in the global financial system, and therefore in forex currency trading, force other Central Banks to closely monitor events in Washington. After accelerating the growth of the US consumer price index to 3.5% in March and reducing the expectations of the futures market regarding the scale of the Fed's monetary expansion in 2024 to 2 acts, Bloomberg predicts that Central banks in developed countries will ease monetary policy by less than a quarter of the rate hike in 2021-2023.One member of the ECB's Governing Council, speaking anonymously, told the Financial Times that it would be illegal if the European Central Bank acted on the instructions of the Fed. Another stressed: The Eurozone is not Switzerland. The ECB can work independently without paying attention to the euro exchange rate. One source close to the popular publication claims that only 3 of the 26 members of the Governing Council voted for a rate cut. The second, on the contrary, is sure that at least six colleagues were ready to support the monetary "pigeons".It seems that the decision to start the monetary policy easing cycle has already been made. The head of the Bank of France, Francois Villaroy de Galo, said that this would happen in June, and several more acts of monetary expansion would take place before the end of the year. The futures market estimates only a 22% probability of the June start of the Fed rate cut, so the ECB is definitely ahead of the pack leader. And his currency is becoming a pariah.So far, the euro has not fallen as much as commodity currencies or currencies used for funding. Moreover, in the third week of April, the prospects for an improvement in the IMF's forecasts for the global economy and positive US corporate reports may support the EURUSD bulls. The strengthening of global risk appetite may hit the US dollar as a defensive asset, while no one has canceled the euro's pro-cyclical status.Nevertheless, the different rates of monetary policy easing by the Fed and the ECB have already led to an expansion of the US and German bond yield spread to the maximum levels of 2019, which is a significant factor in the weakening of the EURUSD. We sell the pair with growth in the direction of targets at 1.06 and 1.05.EUR/USD Technical analysisThe short-term downward trend of EUR/USD developed last week. Sellers were able to break below the target zone of 1.0729 - 1.0704 and reached the next target - the Golden Zone within the boundaries of 1.0645 - 1.0636. The gold zone has not been broken through at the moment, so a further decline in the pair is not expected yet.An upward correction of EUR/USD begins in the Asian session on Monday. If the movement continues, it will be possible to wait for testing of the resistance area 1.0714 - 1.0706. From here, we will consider sales with a target at last Friday's minimum. 
FOREX Fundamental analysis for EUR/USD on April 12, 2024The ECB does not belong to the federal districts of the United States and does not repeat the actions of the Federal Reserve," said Olli Rehn, a member of the Bank's Governing Council, and this accurately reflects the situation. At the April meeting, the European Central Bank decided to leave the deposit rate at 4%, but hinted at a possible reduction in June. Frankfurt may start the process earlier than Washington, regardless of the Fed, which will negatively affect EUR/USD.Christine Lagarde noted that several ECB board members were ready to cut rates, but most are of the opinion that it is better to do so in June. This obliges the regulator to act, especially given the current dynamics of inflation. CME derivatives estimate the chances of a Fed rate cut in early summer at just 24%. Thus, Frankfurt can start monetary expansion first.Of course, the ECB does not depend on the policy of the Federal Reserve, but the United States remains the largest economy in the world, and news from there has an impact on the Eurozone. ING estimates that the effects of accelerating American inflation will be felt in Europe in about 6 months. Therefore, the futures market reduces the projected scale of monetary expansion not only by the Fed, but also by the ECB.The collapse of the EURUSD could have been even more serious if not only consumer prices had accelerated, but also producer prices. However, the PPI increased by only 0.2% mom. The underlying index also remained stable. This gives some respite for EURUSD, but does not change the overall positioning of forex currency trading.Boston Fed President Susan Collins notes that the urgency of lowering rates is not as important now as it was at the beginning of the year. Her colleague from the Federal Reserve Bank of New York, John Williams, believes that monetary policy adjustments are not required at all in the near future.The different timing of the start and the pace of rate cuts lead to an expansion of the difference in US and German bond yields, which creates conditions for the overflow of capital from Europe to North America and a further fall in the EURUSD to the area of 1.055.Although the euro may still surprise. The US corporate reporting season will begin next week, which may support the S&P 500 and increase appetite for risky assets, putting pressure on the dollar. However, an upward pullback of EURUSD will provide an excellent opportunity to sell the pair with an eye on 1.06 and 1.05. 
FOREX Fundamental analysis for EUR/USD on April 11, 2024Even the Fed makes mistakes sometimes. The rapid slowdown in inflation in 2023 has given FOMC members a sense of confidence. They were ready to ignore the acceleration in prices in January-February, arguing that the overall picture has not changed. In their opinion, the trends in CPI and PCE remain "bearish", and eventually inflation will reach the target level of 2%. However, the third consecutive impulse of inflationary growth threatens to change the positioning of the Fed and cut off the oxygen to buyers of EURUSD.In March, consumer prices jumped to 3.5%, and core inflation froze at 3.8%. The disinflation process is clearly slowing down, forcing investors to change their forex trading methods. If earlier everyone was concerned about the date of the start of the Fed's monetary expansion cycle, now it is whether monetary policy easing will begin at all in 2024.Before the publication of US inflation data, market expectations for the start of monetary expansion in June were estimated at about 50%, but after the release they fell to 18%. Derivatives don't really believe in July either, preferring September. Expectations regarding the extent of the Fed's monetary policy easing have decreased from 65 basis points to 45 this year. 80 basis points are forecast for the ECB. And it is not surprising that with such a divergence of the monetary outlook, the EURUSD is fallingThe European Central Bank is doing everything possible to confirm its readiness to begin easing in June. That would be a compromise between the hawks and the doves. However, by summer, according to Bloomberg estimates, consumer prices in the Eurozone may fall to 1.8%, and economic growth will remain weak. The ECB will find itself in a difficult position. He will either be forced to cut rates at each meeting, or make a deeper cut at one of the meetings. Wouldn't it be better to start monetary expansion in April?Investors' attention has finally shifted from the start date to the speed of monetary policy easing. This is the exact opposite of the views of 2015-2016. Nine years ago, the Fed made it clear that it was going to raise rates, but constantly postponed this decision due to the weakness of the global economy. In the end, rates rose only twice - in December 2015 and in December 2016. The US dollar initially grew on expectations of monetary restriction, but then lost its position in forex currency trading.The strength of the American economy is so great that the Fed is forced to postpone rate cuts to a later period. The US dollar is confidently leading among the G10 currencies, although at the beginning of the year everyone predicted its rapid collapse.We expect the pair to continue falling. Even if US inflation starts to accelerate in April, the Fed will need additional data. We hold short positions from 1.0845 and periodically strengthen them on upward pullbacks.EUR/USD Technical analysisThe EUR/USD downtrend continued yesterday. The pair moved from the trend boundary of 1.0863 - 1.0850 to the Target area of 1.0729 - 1.0704. Today, sellers are likely to try to break lower. If the bears succeed, then the next target will be the Golden Zone 1.0645 - 1.0636. If buyers do not allow the quote to break below the target area, then we will wait for the development of a corrective movement.The nearest resistance area from which it will be possible to look for entry into short positions again is 1.0819 - 1.0810 
FOREX Fundamental analysis for EUR/USD on April 10, 2024Where are you going, brave souls? Such thoughts come to mind when looking at the gratuitous rise of the EURUSD before the release of an important report on American inflation. The situation would be understandable if consumer prices really slowed down. However, the attempt by euro buyers to push the main currency pair to 1.09, based on ambiguous forecasts, seems at least bold. Actually, the result for the couple turned out to be expected. The European currency has taken a hit. Couldn't it have been different?The five-day rise of the EURUSD over the past six daily sessions looked, to put it mildly, strange. The American labor market is stronger than ever, the economy is even overheated somewhere, which, combined with a serious increase in commodity prices, accelerates the risks of inflation. And no one wants to go back to the 1970s, when the euphoria of winning over high prices ended in a double recession. The dollar is strong, but forex currency trading follows a strange scenarioWill the Fed even want to cut rates in 2024? The question remains open. The president of the Federal Reserve Bank of Atlanta, Rafael Bostic, said that in March he supported one act of monetary expansion, but is ready to change his position and abandon easing altogether if the labor market and the US economy continue to demonstrate their strength.The futures market assumes a 50% probability of an easing cycle starting in June and expects a rate cut of 65 basis points in 2024. This is less than the FOMC forecast in March. But in early spring, the Fed made a statement based on the "if". The regulator is ready to cut rates three times this year if inflation and the economy remain at certain levels. Unfortunately, both of these conditions are not met.A rise in the EURUSD to 1.09 would seem even more illogical against the background of market estimates of the scale of the ECB's monetary expansion in 2024. The European regulator is expected to cut the rate by 85 basis points. Investors expect more cuts from the European Central Bank than from the Fed. Moreover, the first of them may happen as early as April 11. And what is the point of buying euros?The winner is not the one who moves with the crowd, but the one who knows that the crowd is wrong. If it were not for the proximity of the release of inflation statistics in the United States, EURUSD could be safely sold on every wave of growth. However, when monetary policy depends on data, the actual CPI values can affect assets in either direction. No wonder the market is so nervous before this important event.Atlanta Fed President Rafael Bostic will be glad to see figures close to forecasts. However, he prefers to pay attention to details. Previously, investors tried to calculate PCE based on CPI. I think they are not going to give up on this idea now. In any case, strong statistics on US inflation for March will be a strong argument in favor of selling EURUSD with targets of 1.08 and 1.07. A break in the support level at 1.0845 will also be a signal for sellers of the euro. If the statistics are worse than expected, buyers will remain in favor.