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Forex Forecast & Forex Technical Outlook for 15 April 2024 to 19 April 2024

Forex Forecast & Forex Technical Outlook for 15 April 2024 to 19 April 2024

Last week's central topic of discourse pertained to the March consumer price data, which indicate that any potential easing by the Federal Reserve (Fed) is probable to transpire later. There is no indication that we have reached that juncture, as the FOMC is not anticipated to implement policy relief until its meeting on September 18.

The European Central Bank (ECB) maintained monetary policy this week. However, the accompanying statement alludes to the possibility of easing measures in June. Therefore, during its June meeting, the ECB has a higher possibility of a rate cut of 25 basis points. Similarly, the Bank of Canada (BoC) elected to maintain interest rates at their current level, indicating its preparedness to reduce rates in the future.

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Forex Technical Outlook for 15 April 2024 to 19 April 2024

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

  • US Core Retail Sales m/m on Monday
  • Empire State Manufacturing Index on Monday
  • GBP Claimant Count Change on Tuesday
  • Fed Chair Powell Speaks on Tuesday
  • US Unemployment Claims on Thursday
  • US Retail Sales m/m on Friday

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

EUR/USD

The EUR/USD pair continued its downward trend, approaching a five-month trough near 1.0660. Significant speculation that the European Central Bank (ECB) will begin implementing interest rate reductions following its June meeting fueled this decline.

During Thursday's session, the ECB maintained its key borrowing rates at 4.5% to maintain pressure on consumer price inflation. However, the bank acknowledged in its monetary policy statement that inflation is being restrained and overall demand is dampened due to restrictive financial conditions and previously implemented interest rate hikes.

In determining the duration of essential interest rate restrictions, the ECB emphasized its commitment to remaining data-dependent and abstaining from committing to a specific rate path. Following remarks by ECB President Christine Lagarde, speculation regarding the ECB's potential shift toward rate cuts gained momentum. Lagarde indicated that a reduction in interest rates would be warranted if a reassessment strengthened policymakers' confidence in inflation returning to target levels.

Investors will be focused on the monthly Retail Sales data expected to be released on Monday. This data serves as a significant gauge of consumer spending. Increased retail sales figures generally indicate stronger consumer spending, which has the potential to impact inflation expectations.

EUR/USD

 

In the daily EUR/USD price, a strong bearish trend is visible as the recent price failed to break the trendline resistance and had a daily close below the dynamic 20 day EMA. 

In the indicator window, the RSI shows continued downside pressure as it reaches the 30.00 level, while the MACD Histogram maintains the downside momentum below the neutral line.

Based on this structure, a minor upward correction might come before continuing the selling pressure toward the 1.0448 support level. An immediate buying pressure and a daily candle above the 20 day EMA could eliminate the selling pressure at any time.

GBP/USD

The strength of the US Dollar caused the GBP/

USD pair to fall below the key psychological level of 1.2500. The continued increase in demand for the US Dollar can be attributed to traders reassessing anticipations of Federal Reserve (Fed) rate cuts at the June and July meetings, which were previously anticipated in light of the elevated inflation figures in the United States in March.

As forecasts now indicate that the Federal Reserve might postpone rate cuts until its September meeting, market sentiment deteriorated, and two cuts were anticipated for the year as opposed to the three initially anticipated. This starkly contrasts with the forecast that called for six rate decreases at the start of the year.

The monthly Retail Sales data for March, scheduled to be released on Friday, will impact the future course of the US dollar. Contrary to the previous estimate of 0.6%, a growth rate of 0.3% is anticipated, which may allay concerns regarding persistently high inflation.

Labor market data and the US Consumer Price Index (CPI) will substantially impact speculation regarding potential interest rate adjustments by the Bank of England (BoE) the following week. At present, the financial markets expect rate reductions to begin in August.

GBP/USD

 

The GBP/USD daily chart shows a bearish continuation at a channel extension, where the current price hovers at the crucial channel support. 

Considering the downside pressure in MACD and RSI, we may expect a bullish correction from the channel support. However, the long-term bull is invalid, which needs a solid trendline breakout with a daily candle above the 1.2700 level.

AUD/USD

The AUD/USD pair encountered renewed selling pressure last Friday. Notwithstanding its descent to a new daily low after disclosing less robust Chinese trade data, the pair successfully maintained its position above the psychological threshold of 0.6500. They executed a modest recovery in the last hour.

Despite the continued strength of the US Dollar (USD), which was fuelled by expectations of the Federal Reserve (Fed) implementing prolonged higher interest rates in response to persistent US inflation, a substantial recovery remained elusive. Moreover, persistent geopolitical tensions stemming from conflicts in the Middle East provided additional support for the safe-haven US dollar, thereby constraining the upside prospects for the risk-averse Australian dollar.

AUD/USD

 

The AUD/USD maintained technical selling pressure below the critical 0.6500 level, which presently functions as a turning point. Given the negative momentum indicated by the RSI Oscillators, a definitive breach below this threshold would provide more downside possibilities in the coming days.

A consistent decrease below the 0.6480 region, with a daily close, would strengthen the pessimistic bias and create an opportunity to reassess the year-to-date low near the 0.6445-0.6440 area encountered in February.

USD/JPY

Early in April, consumer confidence in the US declined, as measured by the UoM's Consumer Sentiment Index. The Current Conditions Index and the Consumer Expectations Index both experienced decreases, with values falling from 77.4 to 79.3 and 82.5 to 77, respectively. Furthermore, the survey results unveiled that the inflation forecast for the next year rose from 2.9% in April to 3.1% and that for the next five years rose from 2.8% to 3%.

Nonetheless, last week, the US Bureau of Labor Statistics disclosed an increase in inflation, as evidenced by the March Consumer Price Index (CPI) surging to 3.5% annually. Similarly, the core CPI rose 3.8% annually, the same as February's rate. The surge in hawkish wagers on the Federal Reserve (Fed) and US Treasury yields prompted by these higher-than-anticipated inflation figures bolstered the USD throughout the week.

At this time, market sentiment seems to have diverged from anticipations of a rate cut in June. If forthcoming data further substantiate these expectations, the USD could potentially witness additional gains.

USD/JPY

 

A successful bullish breakout is seen in the USD/JPY price, which hovers below the 155.02 critical resistance level. As technical indicators suggest an ongoing buying pressure, which could extend the buying pressure in the coming days.

Any minor downside correction could offer a trend trading signal, targeting the 156.00 area.

XAU/USD

Amidst ongoing positive sentiment in the financial markets, the price of gold (XAU/USD) maintained its significant ascent witnessed in the previous three weeks, culminating in a new all-time high above the $2,400 mark on Friday. Constantly generating positive momentum, geopolitical tensions in the Middle East remain a major concern for investors. Furthermore, the expectation of interest rate reductions by prominent central banks in the current year offers additional encouragement for the non-yielding precious metal.

In the interim, speculations that the Federal Reserve (Fed) might delay interest rate cuts bolster the US Dollar (USD), which surged to its greatest level since November 14. This speculation gathered traction following the release of hotter-than-anticipated US consumer inflation data on Wednesday. 

The data has since boosted US Treasury bond yields and strengthened the USD. Despite this, the strong bullish sentiment surrounding the price of gold remains unaffected, suggesting that the XAU/USD continues to follow the path of least resistance to the upside.

XAU/USD

 

After a strong bullish pressure, XAU/USD formed exhaustion at the 2400.00 psychological line, suggesting a possible downside pressure. However, the long-term bias is still bullish due to the prolonged uncertainty in the Middle East.

Any bullish recovery from the 2300.0 to 2268.54 area could be a valid buy zone. However, a bearish daily candle below the 2260.00 level might alter the current market structure and lower the price in the coming days.

BTC/USD

Bitcoin's consolidation phase may be explicable by the forthcoming fourth Bitcoin halving, slated for April 19. Anticipation is growing for a possible dramatic move following the event.

Bitcoin's price typically increases preceding halvings, followed by price corrections as the event approaches. Nevertheless, Bitcoin's market value tends to increase after this substantial miner reward adjustment. The observed behavior may be ascribed to the adverse supply shock that arises from a decrease in supply when demand remains unchanged.

Additionally, macroeconomic factors impact Bitcoin's price discovery. Given the anticipated persistence of high interest rates over a prolonged duration, capital may migrate towards more secure assets such as stablecoins, Bitcoin, and Ethereum. The escalation in Bitcoin's market share highlights this trend of capital rotation.

On-chain metrics offer additional understanding. In contrast to its three-year period before 2021, Bitcoin has experienced a decline in its relative realized profit percentage, suggesting a reduction in profit-taking activity. Furthermore, in light of the March sell-off decline, the Short-term Holder (STH) Market Value to Realized Value (MVRV) Momentum Indicator indicates that short-term holders are amassing positions in anticipation of the halving event.

BTC/USD

 

Bitcoin (BTC/USD) hovers at the top suggesting that bulls are still interested in higher prices. An ongoing bullish pennant pattern could offer a valid trend trading opportunity, where a daily close above 71195.43 could take the price toward the 80000.00 level.

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