FOREX fundamental analysis for EUR/USD on November 18, 2022
Almost the whole year 2022 forex trading was based on the expectation that the Fed's tough policy will trigger a recession of the global economy. The demand for the greenback as a defensive asset was growing, which made the dollar index the leader among other forex indices and allowed the DXY to soar to 20-year highs.
As soon as expectations emerged of a rate cut by the U.S. Central Bank, investors switched to risk and EUR/USD quickly climbed to 1.05. But has the Fed refused to raise rates? Are investors rushing to sell the dollar?
Goldman Sachs believes that the future dynamics of the greenback will not be as straightforward as before, but it will still be a road up. The bank expects the trade-weighted dollar to strengthen by 3% in 2023 because the U.S. economy is the strongest in the world and unlikely to fall into recession. Moreover, the Fed is ahead of the decisions of other central banks, many of which cannot afford to tighten monetary policy.
To shake this forecast according to analysts of Goldman Sachs can only a sharp opening of the economy in China or the unexpected end of the war in Ukraine. If geopolitical tensions ease, EUR/USD might rise to 1.1 by the end of 2023, especially if the ECB continues its rate-raising cycle.
Read more: Basic knowledge of fundamental analysis
However, in any case, a rise in EUR/USD would not be a trend reversal. The Fed continues its monetary tightening cycle and according to the head of the St. Louis Fed, 5.25% is the minimum for the rate. The maximum is seen at 7.0%.
Yes, consumer price growth slowed in October, but it is unlikely inflation will reach the target level of 2% before 2025 - experts believe Reuters. It is doubtful that prices will fall as fast in 2023 as they did in 2022.
Notably, the "hawkish" rhetoric of the Fed representatives was able to convince the stock indices, but failed to influence the buyers of EUR/USD. The pair was getting stronger against the declining S&P 500, breaking the correlation between the currencies and the indices. Moreover, the "bulls" ignored the rumors that ECB plans to postpone the rate hike for an indefinite period. Apparently the euro is supported by warm weather and full gas storages which have reduced the risks of recession.
Most likely the EUR/USD outlook will depend on the performance of the dollar. As long as there are no new drivers, the pair can move in a horizontal range. A breakout of resistance at 1.0405 will consider buying, while a breakdown of support at 1.0330 will consider selling.
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. 
FOREX Fundamental analysis for EUR/USD on April 18, 2024"Don't hold losses and let profits grow," is one of the main tenets of forex currency trading. The rule is simple, but many traders violate this principle. As soon as it starts to get hot, they close deals to lock in the profits they make.The results of the auction for the placement of 20-year US Treasury bonds, as well as talk that other central banks may follow the Fed and keep rates on a plateau, became the drivers of the rebound of the EURUSD pair from the level of five-month lows.The main factor in the strengthening of the US dollar against other forex currency indices is the difference in monetary policy rates between the Federal Reserve and other central banks. Due to the strength of the American economy, inflation in the United States has started to rise, while in other countries this is not happening. This has led to rumors that the Fed will keep rates high, while other Central banks will begin a cycle of monetary expansion, which will lead to a fall in their currencies.In addition, the increase in the yield of treasuries also strengthened the position of the US dollar. At the same time, the slowdown in consumer price growth in Britain has sown doubts in the traders' camp. The futures market shifted the start date of policy easing by the Bank of England to November, and some investors began to assume that the Central Bank would take a second step in 2025. This strengthened sterling's position, and its strengthening dragged the single currency along with it.However, ECB officials have already decided to lower the rate. Even the famous "hawk" Joachim Nagel called June the month of the start of the mitigation cycle. His colleagues are more inclined to July, but there are practically no opponents of the "dovish" reversal in the ECB Council. It is clear that other economies besides the United States are unlikely to be able to withstand high rates. Therefore, monetary expansion in Europe will lead to a further fall in the euro and the pound.Market skeptics point to a slight decrease in the profitability of treasuries. But it is known that there is no trend without rollbacks, and this decline is probably a temporary phenomenon. Demand for 20-year securities increased more than expected, which affected the value of bonds and their yields. Nevertheless, there are quite a lot of factors in favor of a strong dollar, and the downward trend of EUR/USD will recover, especially since the upward correction of the pair allows it to be sold at a good priceAfter short-term EURUSD longs from 1.065, we move on to medium-term and long-term sales to rebound from the resistance at 1.07 and 1.073.Technical analysis for EUR/USDEUR/USD is working out an upward correction of the downtrend. As a result, the pair recovered to the resistance (A) of 1.0693 - 1.0685. Please note that the resistance area has not been broken through, so from here you can sell well in the direction of the minimum of April 16. If the minimum is broken, then the next target is Target Zone 2 within 1.0561 - 1.0544.If buyers are able to break above the resistance (A), then the correction is likely to continue to the next resistance area (B) 1.0739 - 1.0727. The trend line also runs here. From here we will also consider sales. The goal remains the same. 
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.