USDJPY: the pair resumed active growth

USD/JPY, currency, USDJPY: the pair resumed active growth

On Monday, USD/JPY is actively adding to the value in the morning, getting close to the most important resistance of 139.00, the pair is approaching historical highs updated in July, as the dollar received a new impetus from Jerome Powell's speech at the economic symposium in Jackson Hole. The head of the Federal Reserve confirmed the regulator's intentions to continue tightening monetary policy until complete victory over inflation.

The US currency is strengthening, ignoring Friday's negative macroeconomic statistics. According to the report, the volume of personal household income in July slowed from 0.7% to 0.2%. Expenses decreased from 1.0% to 0.1%.

The yen is also under pressure from economic news. Japan's index of matching indicators was released today, which fell from 99.0 to 98.6 pp in June. The index of leading indicators sank from 101.2 p to 100.9 p.

USD/JPY Technical Analysis

USD/JPY Daily Chart Forex

The Bollinger indicator on Daily remains confidently turned towards growth.

The MACD indicator rises in a positive range and maintains a strong bullish signal.

The stochastic oscillator briefly left the overbought area, but again tests the 80% level from the bottom up for an upward breakdown.

After fixing the pair above 139.50, we proceed to buying an asset with a target mark of 141.50. We will set the stop loss at 138.50.

With a rebound from 139.50, it is recommended to wait for a breakout of the support of 138.50 and then proceed to the formation of short positions with a target of 136.540. Placing a stop loss at 139.50.

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Symbols USD/JPY

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EUR/USD: dollar is rising, but the euro is catching up
EUR/USD, currency, EUR/USD: dollar is rising, but the euro is catching up FOREX Fundamental analysis for EUR/USD on May 24, 2024Recently, investors have been too often faced with the cyclical nature of historical processes. At the end of 2023, they were confident that US GDP growth would slow down, which caused expectations of six acts of monetary expansion from the Fed in 2024, and led to a fall in the US dollar. In mid–April -May, the dollar was again under pressure due to signs of a cooling economy. However, by the end of spring, the situation had changed. The unexpected improvement in US macro statistics, as in the first quarter, put pressure on EUR/USD.The total US PMI rose to 54.4, the highest level in the last two years. S&P Global noted that inflationary pressures come from manufacturing, not services, which indicates price stability and reduces the likelihood of a federal funds rate cut in 2024. The head of the Federal Reserve Bank of Atlanta, Rafael Bostic, believes that monetary policy has not been effective enough, so it is necessary to keep rates at 5.5% for a long time.Add here the fastest reduction in initial applications for unemployment benefits in the United States since September, and the fall in EUR/USD becomes clear. Right now, the good news for Forex is turning out to be bad for the stock market. Despite the impressive financial results and the growth of NVIDIA shares, American stock indexes still declined. A dollar won from this.Can this bring back the theme of American exceptionalism to forex currency trading? I think it's worth cooling the ardor of the EUR/USD bears a little. Unlike at the beginning of the year, global economies are also showing acceleration. Business activity in the Eurozone is increasing at the fastest pace in a year, India is experiencing rapid growth, and Japan is recovering. The idea of synchronizing global economic growth remains relevant, which makes the positions of pro-cyclical currencies, including the euro, more stable compared to the beginning of 2024.In addition, wages in the Eurozone increased from 4.5% to 4.7%, which creates obstacles for the ECB's "pigeons" demanding a reduction in the deposit rate in June and July. However, the head of the Bank of France, Villeroy de Galo, argues that there is no need to panic, since wage growth is temporary and is solely due to data from Germany, while in the rest of the Eurozone it is slowing down.Which will be the winner – American exceptionalism or the synchronization of global economic growth? If the GDP of the United States and the Euroblock grow at the same pace, this will lead to a medium-term consolidation of EUR/USD. Otherwise, the idea of slowing the American economy and closing the gap in GDP growth may restore the upward trend of the pair.New data is needed for further Forex forecasts. If EUR/USD fails to stay above 1.08, the risks of falling to 1.076 and 1.071 will increase. On the contrary, a successful consolidation of the asset above 1.083 will return buyers to the market.
May 24, 2024 Read
EUR/USD: the European currency can recover quickly
EUR/USD, currency, EUR/USD: the European currency can recover quickly FOREX Fundamental analysis for EUR/USD on May 23, 2024Markets are not intimidated by old horror stories, although they may cause some concern. A phrase from the minutes of the last FOMC meeting about the possible resumption of the Fed's monetary policy tightening cycle if inflation continues to rise made investors cautious. Stock indexes retreated from record highs, treasury bond yields rose, and EUR/USD quotes fell below 1.083. Nevertheless, the situation is quite contradictory and it is unlikely that one should react so unambiguously to the results of the last meeting of the regulatorAt a press conference after the April 30-May 1 meeting, Jerome Powell noted that an increase in the federal funds rate is extremely unlikely. This view was also confirmed by Christopher Waller, who recently stated that the Fed's next step would be to ease monetary policy, not tighten it. The Federal Reserve must take into account all risks. If he cuts rates now, inflation could accelerate. If the expansion is delayed, the US economy may fall into recession. According to Christopher Waller, the Fed has 3-4 more months to make the right decision and prevent an economic downturn.The futures market practically did not change forecasts of the scale of monetary expansion after the publication of the protocol. Derivatives are still expecting a reduction in the federal funds rate by just over 40 bps, implying one act of easing with the possibility of a second in 2024. The Fed noted that it intends to maintain its current policy if inflation does not steadily decline to the target level of 2%. The Fed has clearly outlined its position – there is a possibility of a rate cut, but the FOMC will not rush to expand.This scenario is fully consistent with the statements of Federal Reserve officials. Moreover, the protocol noted increased vulnerability risks from asset valuations, in contrast to the milder wording in the accompanying statement. This indicates the Fed's concern about the return of financial conditions to levels that were before the start of policy tightening in 2022, which explains the Central Bank's "hawkish" rhetoric.However, sellers of EUR/USD will not be able to move far only on the statements of officials. Positive economic data from the United States is needed to revive interest in the dollar, and their absence allows the euro to strengthen. In particular, the sharp increase in wages in the first quarter in Germany to 6.2% reduces the likelihood of a continuation of the ECB rate cut in July after the first act in June.If, following German statistics, wage growth rates increase throughout the Eurozone, and purchasing managers' indices for May show an acceleration in the economy of the currency bloc, EUR/USD will quickly recover after the blows inflicted by the minutes of the FOMC meeting.The pair's return to the short-term consolidation range of $1,083-1,089 will be a sign of sellers' weakness and will allow investors to return to EUR/USD longs. A conservative forex trading strategy involves purchases from the 1.086 level.EUR/USD Technical analysisEUR/USD remains in a short-term uptrend, although it tested support 1.0811 - 1.0802 the day before. This range is a strong level near which new purchases can be considered. If appropriate signals appear, we will form long positions with a target at 1.0853. A breakdown of the 1.0853 mark will open up prospects for further strengthening to the maximum of May 16.However, if the support area is broken down, the correction will continue to the next support area 1.0769 - 1.0756. From here, it will also be possible to look closely at purchases with the same goals.
May 23, 2024 Read
EUR/USD: Fed's hawkish rhetoric prevents the euro from strengthening
EUR/USD, currency, EUR/USD: Fed\'s hawkish rhetoric prevents the euro from strengthening FOREX Fundamental analysis for EUR/USD on May 22, 2024The Fed was still able to convince financial platforms. Christopher Waller's words that it will take several months to start easing monetary policy, and during this time the US economy will not collapse, helped EUR/USD to remain stable, despite new S&P 500 records. The futures market reduced the estimated scale of the Fed's monetary expansion from 50 bps immediately after the publication of US inflation data for April to 40 bps. The US dollar began to regain lost ground.Christopher Waller called the latest CPI report satisfactory, but noted that 3-5 more reports will be needed before the rate cut begins at the end of this year or early next year. According to Goldman Sachs, the Fed will keep the cost of borrowing at a high level for a long period, which, against the background of easing the monetary policy of other leading Central Banks in the world, will allow the US dollar to maintain its strength in forex currency trading. Moreover, the inflation target set by the Federal Reserve can be achieved due to the weakening of competing currencies.The "hawkish" rhetoric of the FOMC representatives keeps EUR/USD in a state of consolidation. The euro, through the correlation of currencies and indices, supports the rapid rally of the S&P 500, indicating a high global appetite for risk, as well as signs of economic recovery in the Eurozone. The EU uses the strength of other economies to compensate for its own weaknesses. For example, the EU's foreign trade surplus with the United States has reached a record high, and the trade deficit with China has fallen to its lowest level in the last three years amid high demand in the largest economies of the world and Asia.EUR/USD buyers are taking confidence from the assumption that the divergence in monetary policy between the ECB and the Fed will not be as significant as expected. The futures market forecasts a reduction in the federal funds rate by 40 bps starting in September, and deposit rates by 65 bps starting in June. At the same time, the path of the European Central Bank is not predetermined. Christine Lagarde continues to hold the position that decisions will depend on the data. The head of the Bundesbank, Joachim Nagel, warns that the easing of monetary policy in July, following June, could undermine all the achievements of the ECB in the fight against inflation.Euro fans are in no hurry to attack, fearing "hawkish" comments from the minutes of the FOMC meeting on April 30 – May 1. At that time, the Fed did not have data on April employment and inflation figures, and the acceleration of CPI and PCE in the first quarter forced the Central Bank to be cautious.In such an environment, on the eve of the publication of an important document, you can try to implement a false breakdown strategy. If EUR/USD falls below the key support at 1.083, and then returns above this level to the range of short-term consolidation, then we will buy euros. Such "roller coasters" indicate the weakness of the "bears".
May 22, 2024 Read
EUR/USD: while the dollar is warmed by rumors, the euro is strengthening
EUR/USD, currency, EUR/USD: while the dollar is warmed by rumors, the euro is strengthening FOREX Fundamental analysis for EUR/USD on May 21, 2024When there are no important events in the economic calendar, you need to listen to the statements of the Fed representatives. They unanimously declare that a reduction in rates is not yet expected. At the same time, the stability of the US economy, albeit slowing down, and the threat of new trade wars support demand for the dollar and allow the EUR/USD bears to counterattack periodically.According to Fed Deputy Chairman Philip Jefferson, the latest inflation report looks encouraging. At the same time, the official noted that it is too early to talk about a long-term decline in CPI and PCE. According to him, the acceleration of inflation indicators in the first quarter raises doubts about the sustainability of the disinflationary process. According to the calculations of the Federal Reserve, the basic index of personal consumption expenditures in January-April increased by 4.1%, which is considered too high.Loretta Mester of the Federal Reserve Bank of Cleveland rejects her own idea of three acts of monetary expansion in 2024, calling it inappropriate. Rafael Bostic from Atlanta believes that rates need to be kept at a high level for longer than planned. Michael Barr, the Fed's deputy chairman for supervision, believes that it is necessary to give time to restraining monetary policy so that it shows its effectiveness."Hawkish" statements by representatives of the monetary authorities allowed Treasury yields to rise for the third day in a row after a three-week decline. This brought the EUR/USD sellers to their senses.But if FOMC officials were not impressed by the April CPI report, why should it radically change forex currency trading? We know that the Fed is talking about the need to keep the federal funds rate at 5.5% due to the fact that financial conditions have weakened to their lowest levels since the start of monetary policy tightening in 2022. This means that aggressive restriction does not have a proper impact on the economy and inflation.If the Fed starts talking about lowering rates, this could further worsen the situation and lead to the resumption of the cycle of monetary restriction. This, in turn, may end in a recession, as in the 1970s, when the victory over inflation was prematurely announced.Markets are able to assess the prospects, so the US presidential election and the possible resumption of trade wars remain a more serious threat to EUR/USD. Donald Trump promises to impose duties on all imports from China in order to finance tax reduction programs. According to estimates by the Peterson Institute, this will cost the United States 1.8% of GDP, even without taking into account retaliatory measures from China. Low-income Americans, whose income will decrease by an average of 3.5%, will suffer the most damage.For defensive assets such as the US dollar, a new round of trade wars is good news. However, while EUR/USD is trading above 1.083, the sentiment remains bullish, and an appropriate forex trading strategy should be followed. Only a decrease in the pair below this level will create conditions for sales in the short term.EUR/USD Technical analysisEUR/USD is trying to maintain an uptrend. However, at the moment the pair is trading in a downward correction. To find profitable inputs for purchases, you should wait for the asset to decline to key support areas. These are: 1.0811 - 1.0802 and 1.0769 - 1.0756. When forming long positions from these zones, the maximum of May 16 becomes the target for buyers.If the price is fixed above the extreme of May 16, then the next target of the "bulls" for the euro becomes the "golden" zone 1.0945 - 1.0937.
May 21, 2024 Read
Forex analysis and forecast for USD/JPY for today, May 20, 2024
USD/JPY, currency, Forex analysis and forecast for USD/JPY for today, May 20, 2024 USD/JPY is in a sideways movement near the level of 155.70. The bulls are trying to develop an upward movement that began at the end of last week, when the pair retreated from local lows on May 6.After the release of important statistics from the United States and speeches by FOMC representatives, market participants are trying to predict the timing of a possible reduction in interest rates by the Fed. The main scenario assumes two acts of monetary expansion of 25 basis points each in 2024. The cycle will start in September or November.On Wednesday, data on orders for engineering products in Japan for March, as well as statistics on imports and exports for April, will be published. Analysts predict an acceleration in exports from 7.3% to 11.1% and imports from -4.9% to 9.0%. The trade balance for April is expected to show a deficit of¥339.5 billion after a deficit of ¥366.5 billion in the previous month. According to a survey of leading economists conducted by Reuters, most expect Japan's consumer price index to decline from 2.6% to 2.2% year-on-year in April, which will be the lowest in the last three months, but still exceeds the Bank of Japan's target level of 2.0%. If these forecasts are justified against the background of a significant reduction in GDP in the first quarter, the regulator may reconsider plans to tighten monetary policy, up to the rejection of rate hikes this year.The Bollinger Band indicator on the daily chart shows a sideways movement. The MACD is declining, keeping the sell signal Stochastic turned up near the middle of the working rangeWe will form purchases after a confident breakdown up to the level of 156.00. The target will be 157.00. We will set the stop loss at 155.50.A rebound from the resistance of 156.00 and a subsequent breakdown down to 155.50 may be a signal to sell the pair with a target of 154.50. In this case, we will place the stop loss at 156.00.
May 20, 2024 Read
EUR/USD: ECB has more room for maneuver than the Fed
EUR/USD, currency, EUR/USD: ECB has more room for maneuver than the Fed FOREX Fundamental analysis for EUR/USD on May 20, 2024The big thing starts with the little things. The largest rivers originate from small springs, and the downward trend of the dollar begins with the April employment report in the United States. This release was an important indication of the slowdown in the economy. Inflation statistics have confirmed that the Fed will not be able to raise rates. The only question is, when will the Fed start reducing them? The answer to it is very important for EUR/USD buyers. However, in any case, the road will not be easy for the couple.Despite the slowdown, the US economy remains quite strong. This means that it takes time for the dollar to weaken. According to Societe Generale, EUR/USD may remain in some kind of consolidation range for a long time, but an uptrend is inevitable. The dollar has no strong arguments for strengthening, euro investors believe. However, this is not entirely true. The Fed's battle with inflation is not over yet, and prices may start to rise again. Trade wars, geopolitics and the US presidential election can increase the demand for the greenback as a protective asset. But in the short term, the dollar doesn't look good.Can the Fed officials change something in the dynamics of EUR/USD, talking about the need to keep the rate at 5.5% for a long time, or the minutes of the FOMC meeting from April 30 – May 1? At that moment, inflation was rising for the third month in a row, and there was no question of a slowdown in the economy. Fed officials cannot reason otherwise if financial conditions have fallen to their lowest levels since 2022, when they began raising rates.The Fed corrects its own mistake. In the first quarter, he talked about a loosening of monetary policy amid rising CPI and PCE, which improved financial conditions and made it more difficult to fight inflation. In May, it's time to adjust the course. However, the rhetoric of FOMC officials does not mean much in itself. The dollar index, which grew by 5% until mid-April, in May shows the first monthly decline since the beginning of the year, losing positions among the forex currency indices. Investors believe facts more than words. The slowdown in the US economy is more important to them than the statements of the Fed representatives.At the same time, positive signals continue to come from other countries. German GDP grew more than expected in the first quarter, and business optimism reached a two-year high. Slowing inflation in the US makes the ECB more flexible. If the US CPI had continued to grow, the ECB might have thought three times before cutting rates in June and immediately in July. But now this issue remains open, and decisions will depend on statistical data.The report on salaries in the Eurozone plays an important role. In the fourth quarter, s/p growth slowed from 4.7% to 4.5%. However, stabilization of the indicator at the same level or its growth will force the ECB to be more cautious. This will be a tailwind for EUR/USD and will allow you to hold long positions open from 1.073 and 1.0835.EUR/USD Technical analysisThe short-term upward trend of EUR/USD continues. Today, the pair is growing, approaching the maximum for May 16. If buyers can gain a foothold above the extreme, then the pair will go to the Golden Zone in the range of 1.0945 - 1.0937.It is better to consider entering into new purchases of EUR/USD after the pair's corrective decline to the supports of (A) 1.0811 - 1.0802 and (B) 1.0769 - 1.0756.The signal of a trend change followed by the formation of opening sales will be a breakdown and consolidation of the price below the support (B).
May 20, 2024 Read
EUR/USD: Fed officials do not expect an early victory over inflation
EUR/USD, currency, EUR/USD: Fed officials do not expect an early victory over inflation FOREX Fundamental analysis for EUR/USD on May 17, 2024Evidence of the cooling of the United States economy continues to accumulate, but the Federal Reserve has not yet decided to reduce the federal funds rate. FOMC members John Williams Thomas Barkin and Loretta Mester say that the Central Bank will need more time to defeat inflation. These statements, along with a rapid increase in import prices and a good report on applications for unemployment benefits, led to a weakening of the EURUSD pair.As soon as the US dollar showed weakness, it immediately became the object of criticism. StoneX believes that the collapse of the dollar can occur for several reasons: an improvement in global risk appetite, the recovery of the Chinese economy and the hard course of the Bank of Japan. However, two of these three factors have come into question. Retail sales and fixed asset investments in China did not meet expectations, and hedge funds and asset managers, according to Bloomberg, used the April inflation report to buy dollars. The growth of the USDJPY exchange rate through currency correlation also affected the weakening of other assets.The appetite for risk is really increasing, as evidenced by the next records of stock indexes. However, the market often takes wishful thinking for granted. At the end of 2023, after the Fed forecast a rate cut at three meetings in 2024, investors expected six acts of easing.Now the situation is repeating itself. Weak data on the labor market, retail sales and industrial production have given rise to rumors that the July meeting of the Fed may present a surprise. Given that the Central Bank will have two more employment and inflation reports before that time, the likelihood of a rate cut is growing.Nevertheless, with 175 thousand new jobs and unemployment at 3.9%, the economy can hardly be called weak. Retail sales are rising by 3.5%, which makes it unlikely that the 2% inflation target will be reached soon. The Fed will probably have to wait until inflation drops to this value. Nordea predicts that rates will be lowered in December, rather than in September, which may lead to a drop in the EUR/USD pair to 1.07 by the end of July.The key question for EURUSD is whether the US economy will continue to cool down. If so, Treasury yields will fall, increasing the chances of the Fed easing monetary policy in July, which will lead to a drop in the dollar in forex currency trading. Otherwise, positive macro statistics will bring the greenback back to life.Investors are closing positions and going into standby mode, which may lead to a correction and consolidation of the EURUSD. While these boundaries are not defined, it is possible to use bounces from the support levels of 1.0835 and 1.08 to buy the pair.EUR/USD continues to decline for the second day in a row, correcting after strengthening at the beginning of the week. Today, the pair is trading at 1.0862. In the morning, traders did not show much activity, as they are waiting for the release of inflation data in the Eurozone.Consumer Price Index (CPI) The US grew by 3.4% in April, which is lower than the March strengthening of 3.5%. The base indicator excluding food and energy prices was 3.6% (YoY), which is lower than the previous value of 3.8%, but fully in line with market expectations. Despite the fact that inflation is still well above the 2% target, the data put pressure on the dollar. The decrease in CPI increased market expectations about a possible easing of the monetary policy of the Federal Reserve System (Fed) in the second half of the year.On Thursday, data on initial applications for unemployment benefits in the United States were also published. The number of applications for the week increased to 222 thousand, which exceeded forecasts. The indicator for the previous week was revised upward to 232 thousand. Despite the negative background, dollar buyers were able to take the initiative and ended Thursday's trading session on a "green" wave. The dollar was supported by comments from Fed representatives. Neil Kashkari, President of the Federal Reserve Bank of Minneapolis, expressed doubts that the current monetary policy has a sufficient impact on inflation and called for keeping rates at the current level for several more months. The head of the Federal Reserve Bank of New York, John Williams, noted that one positive inflation report is not enough to neutralize the negative data of previous months, so do not expect an early rate cut from the Fed.Today, traders' attention is focused on inflation data in the Eurozone. The European consumer price index is expected to remain at 2.4% in April, while the base index will be 2.7%. If the forecasts are confirmed, this will be another indication that inflation in the EU countries is gradually approaching the target level of 2%. This could allow the European Central Bank to consider cutting rates as early as June. Thus, the pressure on the euro may increase not only due to the recovery of the dollar, but also due to the high probability that the easing of the ECB's policy will occur earlier than in the United States.
May 17, 2024 Read
EUR/USD: buyers' target at 1.108
EUR/USD, currency, EUR/USD: buyers\' target at 1.108 FOREX Fundamental analysis for EUR/USD on May 16, 2024The EURUSD downtrend has been interrupted after all, and this is good news for risk buyers. However, the pair's transition to strengthening will be much more difficult than it would have been in the first half of May, since the slowdown in American inflation has already been taken into account by traders. In short, it is not the easiest time to trade forex.The decline in consumer price growth in April to 3.4% and core inflation to 3.6% was good news for both the Fed and financial markets. Although, of course, the Fed will not make a decision based on just one report. Moreover, the option of tightening monetary policy cannot be ruled out. The last time the Fed did this was in July 2023, raising rates to 5.5%, the highest level in more than two decades.Based on the PPI and CPI data, it is possible to calculate the personal consumption expenditure index (PCE), the most important indicator of inflation for the Fed. According to the latest figures, PCE will increase by 0.2% per month in April. This will keep the annual rate at 2.8% or slightly reduce it to 2.7%. It's too early to talk about winning over high prices, but you can relax a little.The Fed will probably need a few more reports before starting to ease monetary policy. Derivatives show a 73% chance of a rate cut in September and a 94% chance of two cycles of monetary expansion before the end of 2024. Will there be a third one? This depends on a further slowdown in inflation and a slowdown in the economy.The first comments from FOMC officials after the release of the CPI report indicate that the Central Bank will need more time to make decisions. Neil Kashkari from Minneapolis believes that we need to wait to determine exactly where inflation is heading. Austen Goolsby from Chicago is demanding more data for monetary policy adjustment decisions.The Fed is easy to understand. It is unknown whether the cooling of the American economy will continue or after a slight drawdown, it will return to growth. In addition, the strengthening of the commodity index to its highest value in more than a year increases the risks of a new round of inflation.The idea of changing the EURUSD downtrend is based on the assumption of reducing the divergence in economic growth in the United States and the Eurozone. However, not everyone shares this point of view. The European Union maintains the forecast for the GDP of the currency bloc in 2024 at 0.8% and reduces it from 1.5% to 1.4% in 2025.In general, the EURUSD recovery hypothesis has a right to exist, but the bulls face serious obstacles. Pullbacks and consolidations are ahead, and it will be increasingly difficult to keep purchases formed from 1,073. In order not to receive losses, traders must clearly control the loading of the deposit. But the target of 1.108 is still relevant.EUR/USD Technical analysisOn Wednesday, EUR/USD continued to develop a short-term uptrend, which led to testing of the target area of 1.0878 - 1.0853. Today, buyers will try to break through this area and gain a foothold higher. If successful, the next target of the bulls will be the Golden Zone within 1.0945 - 1.0937.I suggest considering the entry into EUR/USD purchases on a corrective decline from the support areas 1.0811 - 1.0802 and 1.0769 - 1.0756. The goal is the maximum of today.
May 16, 2024 Read
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