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EUR/USD resumes lowsAfter bouncing off the trend line that has been in place since October 2023, around 1.0760, the selling seems to have resumed in the EUR/USD today. Price has found resistance right off the 1.0835-40 region. This area has provided some support at the back end of last week, before giving way earlier this week. Once support, it has turned into resistance. From here, the EUR/USD could revisit the trend line and the August low of 1.0777, with the subsequent bearish target being around 1.0700. The dollar's strong rally in recent weeks and the simultaneous climb in bond yields are clear headwinds for the EUR/USD. Next week is a busy one for the economic calendar with lots of US economic data, and lots of major company earnings all to come ahead of the November 5 US Presidential election in the following week. It is unlikely that the dollar will sell-off ahead of the election, meaning the pressure is likely to remain on the EUR/USD in the week ahead. By Fawad Razaqzada, market analyst at FOREX.com
Short
by FOREX.com
1
EUR/USD remains rooted in bearish trendThe EUR/USD's brighter start faded as the session wore on, with the US dollar rebounding across the board. Today’s macro calendar has been quite quiet apart from that bigger than expected rate cut by China’s central bank we saw overnight. In fact, there won’t be much in the way of any important scheduled data release until Thursday’s publication of the PMI numbers from the Eurozone and around the world. This should allow the focus to turn to the US presidential election. In the eurozone, the only notable data release was German PPI, which came in at -1.4% YoY in September, below forecasts of -0.8%. The data points to weak demand and suggests that consumer inflation could fall further, thus allowing more rate cuts by the ECB. This is clearly another piece of data that is negative for the euro. Later this week, the focus for euro traders is expected to focus on the global PMI data release scheduled for Thursday, October 24. The eurozone's manufacturing sector, which has been in contraction for two years, is of particular concern, and weak PMI figures could place further pressure on the euro. Additionally, attention is turning toward the US presidential election, where Donald Trump is gaining ground in the polls. A potential Trump victory could further strengthen the US dollar, particularly due to his hawkish stance on tariffs targeting European and Mexican car imports. Indeed, the Trump trade is already gaining momentum after the latest opinion polls and odds trackers point to an increasing likelihood of him winning the US presidential election. Trump’s protectionist policies should be bad news for the Eurozone as compared to a Harris win. So, if Trump’s odds of success increases over the next couple of weeks, then, assuming everything else being equal, we could see the EUR/USD weaken as a result. From a technical perspective, the EUR/USD remains in a bearish trend, with short-term resistance at 1.0870 (200-day moving average) seems to be holding today. Further key resistance levels come in at 1.0900 and 1.0950. On the downside, the August low of 1.0777 is the next bearish target, followed by the 1.0700 handle. By Fawad Razaqzada, market analyst with FOREX.com
Short
by FOREX.com
GBP/USD edges higher ahead of UK CPIThe GBP/USD finally found some mild buying interest in the last few days, but will it be enough to reverse the trend remains to be seen. Last week, we had some weaker US jobless claims and consumer sentiment data, helping to reduce the appeal of US dollar as traders’ confidence in the Fed’s ability to cut rates grew further. Not that there were many doubts but after last Friday’s strong US jobs report some traders were understandably forced to rethink their expectations for aggressive cuts. Today’s only piece of US data – the Empire State Manufacturing Index – also came in weaker. Earlier today, we had some mixed UK data with unemployment unexpectedly slipping to 4%, down from 4.1%, and as wage growth easing 4.9%, down from 5.1%, in line with analysts' expectations. UK CPI is the highlight on Wednesday. As we look forward to the rest of the week ahead, the lack of any major US data could see the greenback give back some of its recent gains, although that is not to say that the GBP/USD forecast will necessarily turn bullish, as the upside potential could be limited. UK CPI coming up UK CPI has remained at 2.2% annual pace for the last 4 months, but it is now expected to fall to 1.9% i.e., below the Bank of England’s target. Andrew Bailey has recently said that upcoming UK rate cuts could be more aggressive, although the BoE governor has also acknowledged risks of an oil shock from the Middle East situation. The GBP/USD forecast will turn modestly bullish should either CPI overshoot expectations. GBP/USD technical analysis The GBP/USD finally found some mild support from the area between 1.3000 to 1.3045. This zone was previously strong resistance in July, before we broke through it in August. The retest from above in September held, leading to an eventual rally to above 1.34 handle where the cable peaked and then started to head lower. So, whether this 1.3000-1.3045 range holds or breaks will have important ramifications on the near term direction of the GBP/USD. A potential break below could lead to a drop to 1.2900 where the cable will face an even stronger support from the rising trend line that has been in place since September 2022. Meanwhile on the upside, the next potential resistance is seen around 1.3150 followed by 1.3250. By Fawad Razaqzada, market analyst for FOREX.com
by FOREX.com
DXY: A Bullish Outlook for the USDThe US Dollar Index (DXY), a critical gauge of the dollar's performance against a basket of major currencies, recently encountered a significant demand area at 100.53. This pivotal point has historically acted as a fulcrum, influencing the currency's trajectory. Interestingly, this interaction coincides with a notable downturn in the commitment of traders (COT) report for retail traders, suggesting a pivotal shift in market sentiment. Retail Traders Retreat Amidst Bullish Signals Retail traders, often seen as contrarian indicators, have shown a marked decrease in their positions at this juncture, reaching notably low levels. This trend typically suggests a lack of confidence among smaller market participants, which can often precede a reversal when combined with other factors. It's crucial to consider these dynamics within the broader context of market sentiment and economic indicators. Institutional Insights: Fund Managers and Commercials Buying the Dip Conversely, the behavior of more significant market players such as fund managers and commercial traders provides a stark contrast. Fund managers have maintained or increased their bullish positions, demonstrating a robust confidence in the strength of the USD. Simultaneously, commercial traders, known for their strategic depth and market knowledge, have started accumulating positions, "buying the dip." This accumulation by commercials is often a reliable indicator of foundational strength in the market, suggesting that these savvy traders anticipate a forthcoming rise in the dollar's value. Technical and Seasonal Factors Align for a Bullish Scenario From a technical perspective, the DXY has shown signs of being oversold. When a financial instrument reaches such conditions, it often suggests that the selling momentum might be overextended, priming the market for a bullish reversal. This technical signal, in conjunction with the identified demand area, provides a compelling case for an impending upward movement. Moreover, seasonality also plays a critical role in the dynamics of currency markets. Historical data and patterns can influence trader expectations and market movements significantly. For the DXY, seasonal trends around this time of year have frequently aligned with strengthening trends, reinforcing the current analysis that an uptick could be on the horizon. Looking Forward: A Bullish Forecast for the USD Considering these multifaceted insights—from the COT data illustrating a shift away from retail bullishness to the strategic accumulations by institutional players, and the supportive technical and seasonal indicators—the stage is set for a potential long-term increase in the value of the USD. Traders and investors would be wise to monitor these developments closely, as the confluence of these factors could lead to significant opportunities in the forex markets. The current landscape of the DXY presents a textbook scenario where understanding the interplay between different trader behaviors and technical indicators can provide a strategic advantage. As we move forward, keeping a pulse on these shifts will be crucial for capitalizing on the anticipated upward trajectory of the USD. ✅ Please share your thoughts about DXY in the comments section below and HIT LIKE if you appreciate my analysis. Don't forget to FOLLOW ME; you will help us a lot with this small contribution.
TVC:DXYLong
by FOREXN1
3
Dollar Index (DXY) levels to watch ahead of CPIShortly, US CPI will be released at 8:30am EDT or 13:30 BST. Headline CPI is expected to print +0.1% m/m and +2.3% y/y (vs. 2.5% last) Core CPI is seen at +0.2% or +3.2% y/y (unchanged from prev reading). The inflation data will need to be some distance away from expectations to change the course of the dollar, which has been on the rise in the last week and a half. Following last week’s formation of big bullish engulfing candle on the weekly chart, the dollar index has remined on the front foot so far this week, amid continued buying of the dollar thanks to that big beat on the NFP data. At the time of writing, the DXY was holding comfortably above the broken bearish trend and support in the 101.90-102.15 region. It was also above short-term support around 102.65-70 area, which is now the first line of defense for the bulls. They will need to defend this level to keep the bullish momentum alive. The next big area of resistance is still quite far around 103.65 to 104.00 (where the 200-day average meets a former pivotal zone), meaning there is further room for the dollar rally before it potentially fades. By Fawad Razaqzada, market analyst with FOREX.com
TVC:DXY
by FOREX.com
Don’t be misled by the initial NFP reactionAll the attention is on the upcoming release of US jobs report, which is critical for the Fed’s outlook on interest rate rates. But with so much going on with regards to the Middle East and oil prices, and given the weekend risk, the initial NFP-related market reaction may not hold into the close, especially if the data turns out to a bit weaker than expected. NFP expectations: What to look out for As we look towards the upcoming nonfarm payrolls report, expectations are that the US economy has added around 147,000 jobs in September, a slight improvement from the 142,000 we saw in the previous month. Nothing earth-shattering here but do watch out for revisions for the prior months. The unemployment rate is projected to stay steady at 4.2%, while Average Hourly Earnings are expected to rise by 3.8% y/y for the second month in a row with a projected month-over-month reading of +0.3%. If these numbers hold, it’s a sign that the labour market remains surprisingly resilient, and that might just embolden the Fed to keep its foot on the brake when it comes to deciding the size of their interest rate cuts. After all, the Fed has made it clear: if the economy stays strong and inflation doesn’t cool down, they’re going to ease off on loosening monetary policy slowly. How will the US dollar, gold and indices react? A solid jobs report could trigger a bullish reaction for the US dollar, especially if it takes some of the wind out of the sails for those hoping for another 50-basis-point rate cut at the Fed’s next meeting. The logic is simple: a healthy labour market reduces the need for aggressive rate cuts, making the dollar more attractive to traders. On the other hand, if the NFP report disappoints, then this could trigger a potential recovery in pairs such as EUR/USD, and give gold another boost. Once the NFP dust settles, the focus will return to geopolitics and the situation in the Middle East. With the markets obviously closed during the weekend, oil, index futures and the dollar pairs could all create a gap at the Asian open Monday should something big happen between Israel and Iran on Saturday or Sunday. Given this risk, we could see the dollar finding renewed support later, even if NFP misses slightly. By the same token, indices may be unable to hold onto much of their potential NFP-related gains. By Fawad Razaqzada, market analyst at FOREX.com
FOREXCOM:SPX500
by FOREX.com
EUR/USD turns lower on the dayThe EUR/USD couldn't hold onto its earlier gains and has turned negative on the day, potentially creating a bearish signal. Its recent gains have been driven more by external factors, such as China’s efforts to stimulate its economy and weaker US data, rather than positive developments within the Eurozone. However, the Eurozone's economic data, particularly from Germany, has been disappointing, with shrinking manufacturing activity and not so great services sector. This has led to reduced optimism for the euro's future performance, especially as it tests the August high of 1.12. Without significant improvement in Eurozone data, further gains in the EUR/USD will likely be limited unless there is a substantial downturn in US economic indicators. Technically, the EUR/USD remains in consolidation mode between resistance near 1.12 and support at 1.1100 to 1.1125. A break below this area, however, could push the pair towards 1.1000 or lower for then we will have seen the breakdown of the bullish trend, thereby creating a bearish signal. By Fawad Razaqzada, market analyst for FOREX.com
by FOREX.com
EUR/GBP extends drop amid Eurozone concernsThe EUR/GBP is down for another week after giving up its gains last week to close lower, created an inverted hammer/doji candle on the weekly time frame. Following that bearish-looking candle last week, we have seen some subsequent downside follow through so far this week, with rates on course to potentially drop to 0.8300 and potentially even test long-term support at 0.8200 in the not-too-distant future. With data from the Eurozone consistently disappointing expectations, China’s economy far from its growth goal to support Eurozone exports, you do have to wonder where growth for the Eurozone might come from. That’s why traders are not rushing to buy the euro despite today’s big surge in Chinese equities as a result of the latest round of stimulus measures. While a weaker US dollar is masking the EUR/USD weakness, looking at the EUR/GBP and several other euro crosses is telling. The 'Chunnel', which is a reference to the Channel Tunnel that connects the UK and Europe, is approaching its post-Brexit lows nearing a band of prior support around 0.8200 - 0.8300. If you think of the troubles facing the UK economy right now, you’d think the EUR/GBP should be 2-3 hundred pips higher than it is right now. This therefore highlights what investors think of the Eurozone economy right now. Anyway resistance for this pair now comes in around 0.8380 area. By Fawad Razaqzada, market analyst with FOREX.com
by FOREX.com
1
USD/JPY higher on the week despite Fed's 50 bps cutDespite the Fed's outsized rate cut in mid-week, the USD/JPY and other yen crosses have rebounded this week. The yen has been undermined by the ongoing risk-on trade in equities space. Today saw JPY fall further after the BoJ turned out to be more dovish at its rate decision and press conference than expected. As a result, the USD/JPY is on the verge of potentially forming a bullish engulfing weekly candle, after finding good support from around the key 140.00 level. This week's bullish price action suggests that the prior selling pressure may be over, allowing the pair to potentially climb back towards the 146.50 resistance level in the week ahead. By Fawad Razaqzada, market analyst at FOREX.com
by FOREX.com
NZD/USD sets stage for next up moveThe US dollar continues to fall across the board, especially against haven currencies like the Japanese yen. But it is also weaker against the more high beta currencies too, despite the ongoing struggles in the stock markets. The NZD/USD stands ready to benefit from the weakening US dollar, especially in the event we see calm return to stocks. The NZD/USD has been in consolidation mode for the past few days, declining inside what looks like a falling wedge continuation pattern. The kiwi surged last month after a false break reversal pattern was formed around the 0.5860 level (see chart). After hitting a high of just under 0.6300, it has dropped a bit to test - and so far hold - prior resistance at 0.6170 (see red arrows on the chart). This level has now turned into support. If we can now take out the pivotal 0.6218/20 level, then more gains could be on the way, initially targeting the liquidity now resting above the most recent high at 0.6300 area.   So far this week, we have had two disappointing employment indicators from the US, namely JOLTS job openings and now ADP private sector payrolls (rising by just 99K instead of 144K expected and prior number was revised lower too). From here, a substantial further decline in the US dollar would require further bearish US economic data this week. Friday's payrolls report is key in this regard. But any data-driven upside should be limited given the Fed’s clear signal that it will cut rates. Put simply, weakness in US data is needed to keep the pressure on the US dollar, while the upside for the greenback should be limited on any data surprises because of the Fed’s strong indications that rate cuts are starting this month. This makes me bearish on the dollar and therefore bullish on major currency pairs like the NZD/USD. By Fawad Razaqzada, market analyst at FOREX.com
Long
by FOREX.com
USD/CAD rises towards resistance ahead of key macro events The USD/CAD pair faces a potentially volatile week due to major economic data releases from the US and Canada. Key events include: 1. US Data Releases: Critical reports like the ISM Manufacturing PMI, JOLTS job openings, and Friday’s August jobs report will influence the U.S. dollar. A strong jobs report could stabilize the dollar, while weaker data may lead to further declines. 2. Bank of Canada Rate Decision: The Bank of Canada is expected to cut rates by 25 basis points on Wednesday, following previous cuts. With Canada’s labor market showing signs of cooling, further monetary easing seems likely. However, a strong jobs report could boost the Canadian dollar despite the rate cut. Technical Outlook: The USD/CAD recently dropped sharply, but it is now rebounding towards a critical resistance zone at 1.3570-1.3600. A move above this zone is needed to turn the tide; otherwise, the path of least resistance on this pair remains to the downside. By Fawad Razaqzada, market analyst at FOREX.com
by FOREX.com
AUD/USD breaks outThe US dollar selling resumed and the AUD/USD having outperformed yesterday on the back of stronger Aussie data, has broken out above 0.6635-45 resistance just now. Can it hold its gains into the close? The breakout certainly suggests more gains could be on the way in the early parts of next week. Apart from PMI data, there is not much Aussie data to look forward to next week. So, the focus will be on the People’s Bank of China on Tuesday, followed by global PMIs on Wednesday and then the Jackson Hole Symposium at the end of the week. Can the AUD/USD extend its rise towards the July high near 0.6800? PBOC interest rate decision Chinese investors are looking at a relatively calm week following the release of important data in the preceding weeks. Overall, we saw mixed-to-weak data pointers, underscoring the need to lower interest rates. The People’s Bank of China last month cut interest rates in a surprise move. The 1-y Loan Prime Rate, which commercial banks use to lend to households and businesses, was trimmed to 3.35% from 3.45%, while 5-y Loan Prime Rate, which is an interest rate applied by commercial banks for mortgage loans, was trimmed to 3.85% from 3.95%. This time, no changes are expected, as the Medium-term Lending Facility (MLF) and 7-day reverse repo rates have remained steady throughout August. Jackson Hole Symposium The Economic Policy Symposium in Jackson Hole, Wyoming, draws central bankers, finance ministers, and financial market participants from across the globe. The Fed has historically used this convention to signal major policy changes. Are we going to see the biggest hint yet that the FOMC will embark on a rate cutting cycle starting at their 18 September meeting? Recent data showing stronger retail sales and jobless claims indicate that a 25-basis point cut at the September FOMC meeting seems more probable than a 50-basis point reduction that was priced in a couple of weeks ago. However, given the Fed’s increasing emphasis on the labour market, the upcoming non-farm jobs report on September 6 will be crucial in determining the final decision. By Fawad Razaqzada, market analyst at FOREX.com
Long
by FOREX.com
AUD/USD faces key test with US CPI and Aussie jobs data loomingThe AUD/USD has found a bit of resistance around the 0.6640/0.6650 area ahead of the release of US CPI shortly. The small pullback is largely due to profit-taking ahead of US inflation data and Australian employment data due for release in the early hours of Thursday. The underlying trend is bullish and so long as we don't see a hot inflation report from the US, the path of least resistance would remain to the upside. The trend turned bullish on the Aussie ever since it created a false break reversal pattern beneath prior low around 0.6362. The sharp recovery from that level once it was reclaimed has lifted rates above several levels, including the 0.6500, 0.6565 and the 200-day average around 0.6600. These are now the key support levels to watch, especially the 0.6600 handle. As mentioned, the focus is now turning to US inflation data. Following a weaker PPI report on Tuesday, investors will be hoping for a weaker CPI print today compared to a headline and core prints of +0.2% m/m expected (or 3.0% y/y for headline CPI). If seen, or even if the data is line with forecasts, this could further cement expectations for a 50-basis point rate reduction in September and a total of 100 bp cuts for 2024. This scenario should further boost the AUD/USD outlook. However, a strong print, which is evidently not priced in, could have a big negative impact on this and other major FX pairs. By Fawad Razaqzada, market analyst at FOREX.com
Long
by FOREX.com
GBP/USD climbs above 1.28 handle after softer US PPIThe GBP/USD climbed above the 1.28 handle after today's release of a weaker US PPI report caused a mild drop in the dollar. Earlier we had mixed-bag UK employment data helping to lift the pound across the board. The GBP/USD pair will be facing more tests later this week with CPI inflation and retail sales data to come from both sides of the pond. In recent days, market volatility has died down and the US dollar has fallen against the high-beta commodity dollars and risen against low-yielding currencies like the Japanese yen. If we don’t see any upside surprises in US CPI inflation and activity data later this week, this should cause the US dollar to fall further and support the GBP/USD modestly further. By Fawad Razaqzada, market analyst at FOREX.com
by FOREX.com
EURNZD Double Top Formation Signals Potential Short OpportunityThe EURNZD currency pair has recently formed a classic double top pattern at a significant supply area, signaling a potential reversal. This double top aligns with broader Forex seasonality trends, reinforcing the likelihood of a downward movement. The confluence of these technical and seasonal factors suggests that the current levels may offer an attractive entry point for short positions. Traders observing this setup on a daily timeframe may find it an opportune moment to capitalize on the anticipated bearish trend. As the pair tests the supply zone for the second time, we are closely monitoring the price action for signs of a sustained reversal. With the added weight of seasonal analysis, this short position aligns with a broader strategy of trading in harmony with established market cycles. We are considering a short position on EURNZD, targeting potential downside as the pair responds to the resistance offered by the supply area and the natural seasonality patterns in the Forex market. ✅ Please share your thoughts about EUR/NZD in the comments section below and HIT LIKE if you appreciate my analysis. Don't forget to FOLLOW ME; you will help us a lot with this small contribution.
Short
by FOREXN1
1
EUR/USD could be heading above 1.10Though the EUR/USD is currently constrained, I believe we could see the euro and other major currencies strengthen against the dollar once equity markets stabilise, which they are trying to today. The greenback has lost its yield appeal due to weak economic indicators hinting at a potential recession in the US. Up until a couple of days ago, currencies with lower interest rates like the yen, franc, and yuan had benefited from the weakening dollar. However, this trend could soon shift towards higher-yielding currencies. From here, a break above 1.10 handle looks likely given the underlying bullish trend and macro factors mentioned above. By Fawad Razaqzada, market analyst for FOREX.com
Long
by FOREX.com
AUD/USD looks poised to recoverOvernight, the Reserve Bank of Australia acknowledged potential risks to the downside but overall, the policy statement suggests a greater concern with the possibility of inflation remaining elevated than with any shortfalls in economic activity. Cash rate futures currently indicate a roughly 90% probability of a 25-basis point rate cut by the meeting on December 10. That is way less than what the markets are pricing in for the US Federal Reserve, which raises the question why the AUD/USD is not rising? Well, I think it is a matter of time and is contingent on risk appetite improving after what has been a bruising week. But that hammer candle from yesterday and today’s mildly bullish PA suggests that a rebound could be on the cards as we head deeper into the week. By Fawad Razaqzada, market analysts at FOREX.com
by FOREX.com
NZD/USD low in?The NZD/USD has bounced strongly off its overnight lows, following a sharp drop below 0.5860 support where it had bounced in July. If it can post a daily close above its opening level, it will created a hammer-like candle on the daily to suggest a major has been formed. But let's wait for that confirmation and US ISM services PMI data before turning bullish on the NZD/USD. The unwinding of carry trades continued to be the main trend overnight, leading to significant fluctuations in currencies such as the Japanese yen and Swiss franc, while stock indices and US futures declined. Once the equity markets stabilize, other currencies may start to strengthen against the dollar. Currently, only the euro has shown any notable strength, besides currencies with lower interest rates like the JPY, CHF, and CNH. The overall outlook for the US dollar is likely to become more negative as the equity markets stabilize, given the recent sharp adjustments in US interest rates. By Fawad Razaqzada, market analyst at FOREX.com
by FOREX.com
GBP/USD breaks 3-year old bear trend lineThe GBP/USD has broken above its bearish trend line established since June 2021, indicating the potential for a significant upward move, possibly reaching the psychological level of 1.3000. But it could rise far beyond that level should this week's US CPI data disappoint expectations. If so, last July’s high of 1.3142, or even higher levels, should come into focus. Meanwhile, short-term support is seen around 1.2815/20, corresponding to last week’s high when a large thrust candle was formed. Key support is now at the 1.2700 level, marking the breakout point. The crucial level in this bullish technical GBP/USD forecast is last week’s low at 1.2615; a drop below this would likely invalidate the bullish breakout. By Fawad Razaqzada, market analyst at FOREX.com
Long
by FOREX.com
1
AUD/USD: One of better options for US dollar bearsThe AUD/USD is the one to watch in the event we see a negative dollar reaction to today's US jobs report, which is due for release shortly. A headline print of 191K is expected, but watch out for revisions to prior months' data too. AUD/USD's recent performance points higher The AUD/USD has been performing well due to strong Australian inflation and a hawkish stance from the Reserve Bank of Australia (RBA). It reached its highest level since January due to weaker-than-expected US data this week, which fueled speculation about a potential Fed rate cut in September. Boost from Recent Data: - Retail Sales: Increased by 0.6% month-over-month (m/m), surpassing the expected 0.3%. - Building Approvals: Rose by 5.5% m/m, beating the forecasted 1.5%. Inflation and Rate Hikes: - Australia's latest inflation report showed a significant rise to 4.0% year-over-year (y/y), higher than the expected 3.8% and April's 3.6%. - This has led investors to speculating over a 50% chance of another rate hike by the RBA, while expectations for a US rate cut are increasing. AUD/USD Technical Analysis: - The AUD/USD had been consolidating in a bullish continuation pattern near its highs. - It recently broke out of this to reach its best level since January. If this breakout holds after NFP then a potential rise towards bigger resistance in the 0.6850-0.6900 range could get underway - The line in the sand for me is at 0.6620, break below would be a bearish technical development Trading Outlook: - The combination of strong fundamentals and positive technical signals makes AUD/USD an attractive pair to trade on the long side, especially if US data continues to weaken. - This pair is potentially a better long candidate compared to others like EUR/USD, which has election risks, or JPY/USD (I know, I know, it is USD/JPY), which faces potential government intervention. By Fawad Razaqzada, market analyst at FOREX.com
Long
by FOREX.com
GBP/USD undermined by weak PMI dataThe GBP/USD was already weaker after the Bank of England kept rates unchanged at 5.25% as expected, in a "finely balanced" decision for some members on Thursday, which the market had interpreted as a signal that the first rate cut was going to come in August. Well, today, we had weaker-than-expected PMI data from the UK, which means that "balance" is shifting towards a cut on a marginal basis. Add to this, the ongoing election uncertainty in the UK, traders are happy to sit on the offer on the cable. As a result, the GBP/USD has dropped to its lowest point since mid-May, testing potential support at 1.2635 at the time of writing. A more significant support to watch is at 1.2550 where the 200-day average meets a prior support/resistance zone. Resistances to watch include 1.2655, 1.2700 and 1.2735. By Fawad Razaqzada, market analyst at FOREX.com
by FOREX.com
EUR/USD hit by weak Eurozone PMI dataThe EUR/USD got another reality check earlier today with the release of disappointing PMI data from the eurozone, suggesting that growth in Q2 may be lower than expected. Add to this the ongoing French election uncertainty and the rise of far-right parties across Europe, and the recent rise in oil prices, the short-term outlook continues to look bearish. As such, I wouldn't be surprise if the EUR/USD now establishes a new ceiling below the 1.07 handle, with the bears having defended prior broken support levels such as 1.0750 and 1.0790 successfully. The next potential support is the trend support at 1.0650, following by the prior low made in April around 1.06 handle. By Fawad Razaqzada, market analyst at FOREX.com
by FOREX.com
EUR/USD unlikely to make a move until French electionThe EUR/USD outlook remains uncertain amid a backdrop of fluctuating US dollar strength and significant upcoming events. The US dollar has been slightly weakened due to a lack of major news and the US holiday, compounded by a disappointing retail sales report. Investors are eyeing key central bank decisions from the Bank of England and the Swiss National Bank on Thursday, alongside US economic data such as jobless claims, building permits, and the Philly Fed Manufacturing Index. The release of global PMI data on Friday will also be pivotal in determining the short-term direction of the dollar. However, the primary focus for the EUR/USD pair remains on European politics, particularly the French snap election starting on June 30. The EUR/USD outlook is tightly linked to the outcome of the French election, with the current stabilization of French bonds and the narrowing of the German-French yield spread indicating a temporary calm in investor sentiment. A significant rally in the EUR/USD is unlikely until after the election results are clear, with any potential gains before then likely driven by a drop in the dollar. The euro is expected to remain under pressure in a USD-negative environment until the political landscape in France becomes more certain. In terms of technical analysis, the EUR/USD is trading within established ranges from earlier this year, with a slightly bearish short-term bias. Key support levels are identified around 1.0650-1.0700, while resistance levels are noted at 1.0750 and 1.0790, with a major hurdle near 1.0950. By Fawad Razaqzada, market analyst at FOREX.com
by FOREX.com