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Forex Forecast & Forex Technical Outlook for 11 March 2024 to 15 March 2024

Forex Forecast & Forex Technical Outlook for 11 March 2024 to 15 March 2024

Considerable traction has been lent to the discourse preceding the March FOMC meeting by the recent performance of a variety of indicators, labor market-related ones in particular. In February, total nonfarm payrolls increased by $275K, exceeding expectations.

The European Central Bank and the Bank of Canada maintained their policy rates unchanged last week. Inflationary concerns in Canada and the Eurozone may prevent their central banks from contemplating rate cuts until June. Additionally, Japan garnered considerable interest. Despite increasing speculation regarding a potential rate hike in March, the forecast indicates that the Bank of Japan will likely take action in April.

Financial markets anticipated greater monetary policy relief at the start of 2024 than the December dot plot by the FOMC suggested. Nevertheless, it seems that the market pricing of a rate cut for this year is more in line with the position taken by the Federal Reserve.

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Forex Technical Outlook for 11 March 2024 to 15 March 2024

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

  • GBP Claimant Count Change On Monday
  • USD Core CPI m/m on Tuesday
  • GBP GDP m/m on Wednesday
  • USD Core PPI m/m on Thursday
  • USD Retail Sales m/m on Thursday
  • Empire State Manufacturing Index on Friday

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

EUR/USD

Friday's US nonfarm payrolls revealed an unexpected decline in average hourly wages and an increase in the unemployment rate, prompting the EUR/USD to surge. These figures suggested that the Federal Reserve (Fed) might contemplate implementing rate cuts earlier.

The primary NFP figure indicated a 275K increase in employment in February, exceeding the anticipated 200K. Moreover,l data from the Bureau of Labour Statistics (BLS) indicated labor market weaknesses. Key inflation indicator: Average Hourly Earnings increased by 4.3% year-over-year and 0.1% month-over-month.

The data indicates decreased inflationary pressure due to wage growth and increased unemployment. A decline in foreign capital inflows negatively impacts the dollar when interest rates are lowered.

Moreover, Bundesbank President Joachim Nagel alluded to a rate cut before the summer, citing improved prospects. In contrast, ECB President Christine Lagarde advises caution and designates June as the forthcoming critical juncture for evaluating interest rate policy.

EUR/USD

EUR/USD showed extensive buying pressure last week, taking the price above the dynamic 20-day EMA. If the price can hold momentum above this dynamic line, we may expect an upward continuation towards the 1.1100 level.

However, a considerable downside correction is pending, where a bullish reversal from the 1.0850 area could offer a long opportunity.

GBP/USD

As investors generally anticipate that the Federal Reserve (Fed) will cut the rate before the Bank of England (BoE), market sentiment towards the GBPUSD remains positive.

Although market expectations anticipate a reduction in interest rates by the Federal Reserve in June, investors anticipate a similar course of action from the BoE beginning in August. Due to robust wage growth, inflation in the United Kingdom is higher than in other Group of Seven (G-7) countries, which may mitigate expectations for interest rate cuts.

The average wage data for the three months in the United Kingdom will provide novel perspectives on the inflation outlook for this week. Strong momentum in wage growth may further allay expectations for a rate cut. BoE policy makers warned that wage growth continues to be nearly double the rate required to return inflation to the 2% target.

GBP/USD

 

A successful channel breakout created a strong, long opportunity in the GBP/USD price, which already provided 200+ pips movement from last week’s forecast.

As long as the price trades above the 1.2710 level, we may expect the buying pressure to extend in the coming days towards the 1.2900 area.

AUD/USD

The US Nonfarm Payrolls for February exceeded estimates of 200K, came at 275K, and the Unemployment Rate increased from 3.7% to 3.9%.

The AUD/USD increased last week, while US Treasury bond yields edged lower. Moreover, the US 10-year benchmark note rate dropped 4.044%, the lowest level since February 2. Meanwhile, the US Dollar Index (DXY) tumbled, suggesting a bullish factor for AUD.

On the other hand, the Australian Trade Balance showed a 0.2% growth QoQ in Q4 2023, which is below estimates of 0.3%.

AUD/USD

AUD/USD formed a successful bullish breakout from the inverse Head and Shoulders pattern. Moreover, a daily candle above 0.6567 suggested a stable buyer activity in the market.

Based on this outlook,  minor downside corrections and bullish reversals from the 20-day EMA could be a long-term opportunity. However, a daily candle below the 0.6500 level might alter the structure at any time.

USD/JPY

The yield on 10-year US Treasury notes has significantly decreased to 4.07% in response to Federal Reserve (Fed) Chair Jerome Powell's admission that a loosening of the restrictive monetary policy posture is required to prevent a recession.

The anticipation that the Bank of Japan (BoJ) will abandon its ultra-dovish policy stance increases in tandem with the indications of a positive wage cycle by a handful of policymakers. This increased investor confidence in the potential for consistent wage growth to sustain inflation at or above the target of 2%. Anticipated is a shift away from the expansionary stance of the Bank of Japan at its policy meeting in March.

As a result of sluggish wage growth and high unemployment, selling pressure on the US dollar is intensified. A week ago, the US Dollar Index (DXY), a metric used to compare the strength of the US Dollar to six prominent currencies, peaked at 102.40.

USD/JPY

 

A sharp selling momentum was seen in the USD/JPY price, taking the price below the dynamic 20-day EMA with a daily close. The weaker US Dollar index and RSI divergence support the downside pressure.

In that case, investors should monitor how the price holds the momentum below the dynamic 20-day EMA. A stall from the current area could signal a bearish opportunity, targeting the 145.00 level. 

However, an immediate bullish reversal above the 149.52 level might alter the structure at any time

XAU/USD

Gold prices surged to a new all-time high above $2,180, as yields on 10-year US bonds fell to 4.04% following US Nonfarm Payrolls (NFP) data publication. In contrast to expectations, the unemployment rate rose to 3.9%, whereas the non-farm payrolls for February exceeded projections by 275K at 275K but remained below the previous estimate of 353 K.

The inflation outlook is anticipated to moderate due to the slower-than-anticipated growth of average hourly wages. The monthly wage increase is marginally 0.1%, following January's 0.6% increase. Investors had anticipated a halving of wage growth to 0.3%. The annual rate of wage growth decelerates to 4.3% from the anticipated 4.4% and the previous estimate of 4.5%; the revised figure for January is 4.5%.

As a result of sluggish wage growth and high unemployment, selling pressure on the US dollar has intensified. A week ago, the US Dollar Index (DXY), a metric used to compare the strength of the US Dollar to six prominent currencies, peaked at 102.40.

XAU/USD

 

A prolonged bullish trend, supported by rising moving averages, provided a huge gain for XAU/USD bulls. As a result, the price broke previous highs and reached a level not seen before.

In this context, the overall market trend for XAU/USD will be bullish until a bearish exhaustion appears. Meanwhile, any intraday dip could be a long opportunity in this pair, targeting the 2200.00 level.

BTC/USD

Santiment's platform presents a thought-provoking viewpoint regarding the Supply on Exchanges metric, which has experienced a reduction from 1.01 million BTC to 885K BTC. The 11% decline in value indicates that Bitcoin (BTC) holders are optimistic regarding a forthcoming surge, which motivates them to withdraw their holdings from exchanges. This outflow indicates an optimistic outlook regarding the ecosystem.

The GIOM metric of IntoTheBlock predicts that most Bitcoin (BTC) holders are presently profitable, as expected. A minority of investors who spent between 65,000.00 and 67,400.00 to acquire 411K BTC have reached the break-even point. The investors' possession of a restricted quantity of BTC renders the probability of a Bitcoin price decline exceedingly low.

BTC/USD

An ongoing buying pressure with bullish exhaustion provided a stable market trend for the BTC/USD price. In that case, the price is more likely to reach the 70,000.00 level before reaching the 100,000.00 area.

As the current price is at a record high with no significant level above it, investors should wait for the price reaction from near-term support levels. A successful rejection from the 70,000.00 level could be a primary signal for a market reversal but it might need more clues before opening a short position.

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