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Forex Forecast & Forex Technical Outlook for 01 April 2024 to 05 April 2024

Forex Forecast & Forex Technical Outlook for 01 April 2024 to 05 April 2024

The economic data released last week confirmed existing patterns of growth for the US economy. Consumer activity exhibits resilience, inflationary pressures appear to be diminishing albeit at a decelerated pace, and sectors susceptible to interest rates maintain their stability.

Emerging market economies and G10 nations issued monetary policy declarations. The Riksbank of Sweden maintained its policy rate at 4.00% and signaled a potential reduction in interest rates in May or June. 

The median "longer-run" dot increased marginally in the most recent Summary of Economic Projections (SEP) from the Federal Open Market Committee (FOMC). While the rise amounted to a mere six basis points, it signifies the initial occurrence since March 2019 in which the median dot has exceeded 2.5%. 

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Forex Technical Outlook for 01 April 2024 to 05 April 2024

Let’s see the list of events to look at this week:

  • CNY Manufacturing PMI on Sunday
  • ISM Manufacturing PMI on Monday
  • German Prelim CPI m/m on Tuesday
  • ADP Non-Farm Employment Change on Wednesday
  • CHF CPI m/m on Thursday
  • CAD Employment Change and Unemployment Rate on Friday
  • US Non-farm payroll and Average hourly earnings on Friday

Let’s see the market outlook from the weekly forecast:

EUR/USD

According to the most recent data released by the BEA, Core Personal Consumption Expenditures (PCE) increased by 0.3% month-over-month (MoM) and 2.8% year-over-year (YoY).

However, the headline PCE figures increased by 0.3% MoM compared to January's figures, which was marginally less than anticipated. PCE recorded 2.5% in the twelve months preceding February, which was 2.5% in February and a tenth of a percent higher than the previous month, as anticipated.

Additional economic indicators indicate that Wholesale Inventories increased by 0.5% month-over-month in February, a substantial improvement from the previous month's reading of -0.2%.

At present, the probability of a rate reduction occurring by June 12 has declined from 85% to 66% since the FOMC meeting.

EUR/USD

A downside continuation is visible in the EUR/USD price, where the near-term support level is at the 1.0697 level. The RSI remains below the 50.00 level, while the MACD Histogram is bearish.

Therefore, a bearish pressure is potent towards the 1.0697 level, where a break below this line could lower the price towards the 1.0550 area.

GBP/USD

The annual inflation rate in the United States increased marginally to 2.5% in February, as measured by the PCE Price Index. This slight increase compared to January's 2.4% figure aligned with market expectations. The index exhibited a monthly increase of 0.3%, marginally lower than the anticipated 0.4% surge. Consistent with expectations, core PCE, which excludes volatile food and energy costs, increased by 2.8% annually and by 0.3% monthly. 

The Federal Reserve may maintain its present position on interest rates in light of persistent inflationary pressures, as evidenced by upward revisions to January's core PCE data. Subsequent employment indicators will substantially impact future policy determinations, potentially determining the timing and extent of rate adjustments.

As a result, the Federal Reserve may be compelled to delay further reductions in interest rates until June, thereby reducing the three reductions originally anticipated for 2024. This course of action has the potential to ultimately strengthen the US dollar.

GBP/USD

Like the EUR/USD, a bearish continuation is also visible in the GBPUSD price, where the recent price hovers below the dynamic 20-day EMA level. Moreover, the RSI and MACD signals have a bearish pressure as a confluence signal.

In that case, the price is more likely to come towards the 1.2517 support level this week. However, breaking below this line might extend the downside pressure towards the 1.2300 psychological level.

AUD/USD

Alongside the PCE data, the US Bureau of Economic Analysis (BEA) disclosed Personal Income and Personal Spending figures, which provided valuable insights into the behavior of American consumers. According to BBH analysts, the increase in February retail sales may strengthen data on personal expenditure.

On the domestic front, recent economic indicators from Australia have revealed a decline in monthly inflation and retail sales figures that fell short of expectations. The deceleration in economic momentum has increased anticipations regarding possible reductions in interest rates by the Reserve Bank of Australia (RBA) towards the end of 2024.

Combined with the most recent meeting minutes of the RBA, the Judo Bank PMI figures for Australia, which are expected to be released next week, may offer additional insight into the economic trajectory.

AUD/USD

 

AUD/USD hovers at the trendline support, where consolidation is visible in the intraday chart. Therefore, investors should monitor how the price reacts to the near-term low.

Following the selling signal in the indicator window, a daily candle below the e0.6479 level might extend the downside momentum toward the 0.6339 level. 

On the other hand, a sell-side liquidity sweep from the near-term low with an immediate reversal above the dynamic 20-day EMA could be a potential long opportunity.

USD/JPY

The year-on-year (y/y) growth of Tokyo's Core Consumer Price Index (CPI), which excludes perishable food, decelerated to 2.4% in March, following a 2.5% increase in February. This reading was consistent with market expectations. This specific inflation gauge is subject to rigorous monitoring as a primary indicator of nationwide inflation trends. Furthermore, the Tokyo "core core" consumer price index (CPI), which excludes fresh food and energy, also decreased, falling from 3.1% in February to 2.9%.

The declining trends in cost-push inflation and services inflation present a formidable obstacle for the Bank of Japan (BoJ), which is committed to achieving a sustained inflation trajectory that is propelled by services inflation. Even with the recent determination by the BoJ to initiate a rate hike, which was facilitated by substantial salary increases stemming from nationwide wage deliberations, the persistent lack of progress in services inflation could potentially impede subsequent increases in interest rates.

The BoJ maintains its accommodating stance largely identical, despite the rumors surrounding its departure from negative interest rates for the first time in eight years. The BoJ declared its intention to maintain previous levels of government bond purchases, with the March meeting's summary of opinions emphasizing a gradual and cautious approach to policy normalization.

USD/JPY

The USD/JPY extended the buying pressure in recent days and reached a 12 year’s high. Now, investors await how the BOJ intervenes in the FX market before anticipating a trend change.

As of now, the price consolidates at the top, from where a bearish reversal with a daily candle below the 150.25 low could be a potential short opportunity, targeting the 148.00 psychological level.

XAU/USD

As it approaches $2,230 per troy ounce, the price of gold has surged to all-time highs to extend its winning trend for the fifth consecutive session on Friday. Nevertheless, trading activity is subdued due to many market participants' probable observance of Good Friday. Buyers are being drawn to gold amid mounting supposition that major central banks will initiate a cycle of interest rate reductions this year.

As investors anticipate three interest rate reductions from the US Federal Reserve (Fed) in the future months, gold is becoming an increasingly popular investment. Leaning toward a dovish posture, Chicago Fed President Austan Goolsbee forecasts three interest rate cuts but emphasizes the need to observe additional evidence of inflation abatement before taking further action.

A resolution has been adopted by the United Nations Security Council, which urges a cessation of hostilities and an armistice between Israel and Hamas on the geopolitical front. Nevertheless, despite the ongoing conflict in the Gaza Strip, Palestinian militants have yet to negotiate the release of any captives. 

According to a report by the Palestinian Red Crescent, on Sunday, Israeli forces encircled two more Gaza hospitals, entrapping medical personnel amid fierce gunfire. The heightened geopolitical tensions have increased the desire for safe-haven assets, including gold.

XAU/USD

In the daily XAU/USD price, bulls remain steady despite the low liquidity from the Holiday. Moreover, the dynamic 20-day EMA is below the current price, while the RSI is overbought above the 70.00 level.

As a bullish trend is strong, the price can move higher at the 2300.00 level after having a minor intraday correction.

On the bearish side, a strong selling pressure with consolidation below the 2145.50 level could lower the price towards the 2000.00 psychological level.

BTC/USD

Following a recent adjustment, Bitcoin (BTC) has experienced a reduction of 0.97% in mining difficulty, resulting in an indicator value of 83.13 T. Since the last adjustment, the average hash rate for the period was 593.99 EH/s.

According to Bitwise, numerous asset managers have already allocated 3% of client funds to the dominant cryptocurrency, and many more are expected to do so shortly.

In the past, apprehensions existed among institutional circles regarding the possible extinction of Bitcoin. However, these concerns have been dispelled due to the ETF's success.

As proposed by Metis, the DenCun update to the Ethereum network is regarded as a critical milestone in worldwide blockchain implementation. This development may prove advantageous for traditional finance (TradFi) firms that operate in the cryptocurrency sector.

Sam Bankman-Fried, the former CEO of FTX, was given a 25-year prison term and a $11 billion sanction by a court in the Southern District of New York. Prosecutors had originally aimed for a forty to fifty-year prison term.

BTC/USD

In the daily chart of BTC/USD, prolonged bullish pressure is visible, and the recent price hovers within a bullish pennant pattern. In that case, a successful breakout above the pennant resistance could be a potential long opportunity, targeting the 80000.00 psychological level.

On the other hand, a strong downside correction could come, where the 60000.00 level could be a crucial price to look at. A break below this line could lower the price towards the 50493.30 support level.

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