EURUSD is moving in box pattern and market has reached resistance area of the pattern
EURUSD – Steadies Ahead of Powell Testimony and ECB Meeting
The EUR/USD pair experiences a slight dip on Wednesday, although downside pressure remains contained. Expectations of a potential rate cut by the Fed in June weigh on the USD, providing some support to the pair. Traders are now eagerly awaiting Fed Chair Powell’s testimony, with the upcoming ECB meeting on Thursday also on their radar.
During the Asian session on Wednesday, the EUR/USD pair continues its pattern of consolidation, marking its second consecutive day of narrow trading range. While there was a brief uptick in spot prices on Tuesday due to a slight weakening of the USD following disappointing US ISM Services PMI data, the momentum failed to sustain, falling short of reaching a one-week high. Traders appear hesitant to take strong bearish positions on the USD and prefer to await further clarity on the Fed’s stance regarding interest rate cuts. Therefore, Powell’s testimony before Congress is anticipated to be pivotal in shaping USD dynamics and providing fresh direction for the EUR/USD pair.
In addition to Powell’s testimony, traders will closely monitor US macroeconomic data releases on Wednesday, including the ADP report on private-sector employment and JOLTS Job Openings data. Attention will then turn to the ECB meeting scheduled for Thursday and the highly anticipated US Nonfarm Payrolls (NFP) report due on Friday. The EUR may find support from reduced expectations of aggressive policy easing by the ECB, potentially limiting any downside correction for the EUR/USD pair.
GOLD – Price Reacts to Powell’s Testimony and US Jobs Data Amid Dollar Recovery
The dollar stages a recovery alongside Treasury yields, with investors closely monitoring Powell’s testimony and upcoming US jobs data. Meanwhile, gold faces potential correction amid a less dovish stance from Powell and overbought RSI conditions. In Asian trading on Wednesday, gold shows signs of corrective movement for the third consecutive session, amid anticipation of Powell’s remarks and key US economic indicators.
XAUUSD is moving in box pattern and market has reached resistance area of the pattern
After a relentless surge driven by expectations of aggressive interest rate cuts by the Fed, gold buyers pause, reflecting concerns over soft US economic data and its implications for a ‘soft-landing’ scenario. Recent reports, including a slip in the Services PMI and a decline in prices paid for inputs, contribute to market worries. The probability of Fed rate cuts in June, though slightly lower than earlier in the week, remains significant.
The trajectory of gold now hinges on Powell’s testimony, with markets eagerly awaiting clues about the timing and extent of potential rate cuts this year. Ahead of Powell’s appearance, investors await the ADP Employment Change data and the JOLTS Job Openings survey, which will likely influence trading in both the US dollar and gold.
USDJPY – Dips Amid BoJ Speculation, Fed Rate Cut Expectations
The USD/JPY pair experiences a decline as speculation grows about the Bank of Japan (BoJ) potentially lifting its negative interest rates. Positive indicators for Japan’s wage growth suggest the likelihood of sustaining inflation above 2%. Investors are eagerly anticipating Fed Chair Powell’s testimony for insights into future US interest rate policy.
USDJPY is moving in box pattern and market has reached support area of the pattern
Pressure mounts on the asset as the Japanese Yen strengthens following reports from the Jiji News Agency indicating that some members of the BoJ’s Monetary Policy Committee (MPC) favor moving away from the ultra-loose monetary policy stance in the upcoming March policy meeting.
BoJ board member Hajime Takata expressed optimism, stating that the central bank’s goal of maintaining inflation above 2% on a sustainable basis is within reach. The Japanese Yen is anticipated to gain momentum if the BoJ decides to lift its long-standing negative interest rates, which have been in place for over a decade due to persistent challenges in sustaining inflation above 2%. Weak wage growth has been a key factor contributing to inflation remaining below target. However, there are signs of improvement in wage growth outlook, sparking discussions about potential shifts away from expansionary policy measures.
Meanwhile, the US Dollar faces downward pressure as market expectations for Federal Reserve (Fed) rate cuts in the June policy meeting increase. The CME FedWatch tool indicates a slightly over 57% probability of a 25 basis points rate cut in June, up from around 52% on Tuesday. Looking ahead, the direction of the US Dollar will hinge on Fed Chair Jerome Powell’s congressional testimony scheduled for 15:00 GMT. Powell’s remarks are eagerly awaited for clues on the timing of potential interest rate adjustments by the central bank.
USDCHF – Strength Amidst Fed Speculation and Weaker US Data
During the early hours of European trading on Wednesday, the USD/CHF pair displays resilience, hovering around the mid-0.8800s. All eyes are fixed on the upcoming testimony of Federal Reserve Chairman Jerome Powell at Capitol Hill, a pivotal event set to influence market dynamics. The potential for hawkish remarks from the Fed chief looms large, posing the prospect of a USD rally against its counterparts. As of now, the USD/CHF pair stands at 0.8845, marking a 0.15% increase for the day.
USDCHF is moving in Descending channel and market has reached lower high area of the channel
Market sentiment leans towards expectations of the Fed initiating rate cuts starting from the June meeting, with projections suggesting a total of four quarter-percentage-point cuts for the year, according to the CME FedWatch Tools. However, uncertainty shrouds the precise timeline, as Fed officials advocate for a data-driven approach before embarking on any interest rate adjustments.
In Tuesday’s developments, the US ISM Services PMI posted a weaker-than-expected figure, declining to 52.6 in February from the previous month’s reading of 53.4. Despite this, the New Orders Index saw a slight uptick to 56.1, while the Employment Index dipped to 48.0 and the Prices Paid Index retreated to 58.6.
Meanwhile, recent data from Switzerland revealed a decline in the Consumer Price Index (CPI) to 1.2% year-on-year in February, down from 1.3% in January. Although this figure surpassed market estimates of 1.1%, it marked the lowest inflation rate recorded since October 2021. The upcoming meeting of the Swiss National Bank (SNB) scheduled for March 21 will provide crucial insights into their stance on interest rates, influenced in part by the CPI data from February.
USDCAD – BoC Announcement Sparks CAD Speculation
Today marks the eagerly anticipated announcement of monetary policy by the Bank of Canada (BoC), a pivotal moment stirring anticipation among economists and traders alike. However, this time around, the BoC’s announcement carries a unique twist—it refrains from unveiling fresh economic projections, injecting an air of uncertainty into the financial markets.
USDCAD is moving in box pattern and market has rebounded from the support area of the pattern
Against this backdrop, economists at ING delve into the intricate dynamics of the USD/CAD outlook, meticulously dissecting the potential ramifications preceding the BoC’s meeting. Among their discerning analysis looms a palpable risk on the downside for the Canadian dollar (CAD). This apprehension stems from the possibility of the BoC ushering in some reference to monetary easing during today’s proceedings. Nonetheless, amidst this apprehension, there’s a prevailing sentiment that the overall message emanating from the BoC will be one of cautious optimism, aimed at tempering market reactions.
Furthermore, the resurgence in Federal Reserve rate expectations has cast its shadow upon the CAD curve, which now reflects a pricing in of 90 basis points of easing over the course of the year. This development underscores the evolving landscape of currency dynamics, hinting at potential implications for the Canadian dollar’s trajectory. Yet, amid these fluctuations, there exists a nuanced understanding that the BoC may find little incentive to further drive down rate expectations at this juncture. Instead, they might opt for a measured approach, preferring to keep this particular meeting as an in-between affair, devoid of substantial market-altering decisions.
Despite this cautious stance, there persists a sense of wariness regarding an imminent rebound in the CAD in the short term. This apprehension is underscored by the complex interplay of various factors shaping the currency markets. However, amid the flux, there’s a glimmer of optimism projected onto the horizon—a broad-based decline in the US dollar from the second quarter onwards is anticipated to exert downward pressure on the USD/CAD exchange rate, potentially steering it towards a more favorable position by year-end.
EURJPY – Records Modest Loss Amidst Bullish Momentum
The EUR/JPY pair experienced a modest decline of 0.31% during Tuesday’s trading session, signaling a pause in the recent upward momentum. Despite this minor setback, the broader perspective still reflects a predominantly bullish trend, with buyers exerting a greater influence compared to sellers.
EURJPY is moving in Ascending channel and market has reached higher low area of the channel
A closer examination of the daily chart reveals that although buyers have been dominant in the market, there are indications of a temporary consolidation following the recent gains. The Relative Strength Index (RSI) for the EUR/JPY pair remains in positive territory, suggesting the overall strength of the buyers. However, the RSI also shows a downward trend, indicating a potential weakening of buyer momentum.
Simultaneously, the Moving Average Convergence Divergence (MACD) confirms the presence of selling pressure, as indicated by the rising red bars. This suggests that sellers are gaining momentum in the short term, contributing to the observed downward consolidation in the pair’s price. Transitioning to the hourly chart, further insights into the current market dynamics emerge. Here, indicators suggest that sellers have taken control, leading to the observed decline in the EUR/JPY pair. Additionally, these indicators are nearing oversold territory, indicating the possibility of a potential reversal or corrective bounce in the near future.
In summary, while the EUR/JPY pair experienced a slight loss in Tuesday’s trading session, the broader trend remains bullish, with buyers exerting significant influence in the market. However, short-term indicators suggest a period of consolidation and potential downward correction, as sellers gain momentum in the near term. Traders will continue to monitor these indicators closely to gauge the direction of the EUR/JPY pair in the coming sessions.
GBPUSD – UK Budget and Powell’s Report Awaited
Anticipation mounts as UK Chancellor Jeremy Hunt prepares to unveil tax cuts in the upcoming Spring Budget, while across the Atlantic, Fed Chairman Jerome Powell is set to deliver the semi-annual Monetary Policy Report.
GBPUSD is moving in Descending channel and market has reached lower high area of the channel
The GBP/USD pair maintains its upward trajectory, surpassing the 1.2700 mark, buoyed by three consecutive days of gains. Investors eyeing the near-term technical indicators perceive a bullish sentiment, eagerly awaiting developments in both the UK budget announcement and Powell’s testimony before the Federal Reserve.
Hunt’s expected announcement of expansionary fiscal measures, including tax cuts, complicates the Bank of England’s task of curbing inflation. Market sentiment leans towards viewing tax cuts as potentially inflationary, leading to speculations of a delay in the BoE’s policy pivot. This sentiment bolsters the Pound Sterling, although the extent of market reaction hinges on the scale of relief provided and the confidence in the BoE’s ability to manage increased spending. As the US economic docket unfolds, attention shifts to crucial data releases such as the February ADP Employment Change and January JOLTS Job Openings. However, the highlight of the day remains Powell’s appearance before the House Financial Services Committee. Powell’s stance on recent economic softening and the inflation outlook will sway market sentiment, potentially strengthening the USD if he adopts a cautious tone. Conversely, confirmation of a possible policy pivot in June could prolong the USD’s weakening trend.
AUDUSD – Gains on Chinese Optimism and Weak USD
The AUD/USD pair sees a positive uptick, bolstered by China’s optimistic economic outlook and a weaker US Dollar, with attention now shifting to US macroeconomic data and Fed Chair Powell’s testimony. China’s National Development and Reform Commission (NDRC) and People’s Bank of China (PBoC) Governor Pan Gongsheng’s positive comments on China’s growth target and monetary policy room provide a boost to the Australian Dollar (AUD), overshadowing Australia’s modest economic growth data.
AUDUSD is moving in Descending channel and market has reached lower high area of the channel
A slight weakness in the US Dollar further supports the AUD/USD pair, with markets pricing in increased odds of a Federal Reserve interest rate cut in June. Additionally, Tuesday’s ISM PMI indicating a slowdown in US services sector growth keeps USD bulls cautious. Traders await fresh cues from Fed Chair Jerome Powell’s congressional testimony, anticipating insights into the rate-cut trajectory. Meanwhile, Wednesday brings the release of US ADP private-sector employment and JOLTS Job Openings data, influencing short-term AUD/USD dynamics alongside broader risk sentiment.
With Chinese trade balance data looming on Thursday and the eagerly anticipated US Nonfarm Payrolls (NFP) report due on Friday, market attention remains focused on USD dynamics, impacting AUD/USD spot prices. Despite recent gains, the pair’s direction hinges on ongoing USD trends.
NZDJPY – Bullish Resilience Amidst Bearish Dominance
The NZD/JPY pair shows contrasting signals across different timeframes, with the daily chart indicating increasing selling pressure, while the hourly chart suggests a resurgence in buyer momentum. Despite these fluctuations, the overall bullish trend remains intact.
NZDJPY is moving in box pattern and market has reached resistance area of the pattern
In Tuesday’s session, NZD/JPY trades at 91.26, marking a 0.45% decline as sellers assert their dominance. However, market sentiment appears mixed, with the pair maintaining its position above key Simple Moving Averages (SMAs), signaling a persistent bullish bias. Furthermore, buyers exhibit strength on the hourly chart, indicating potential resilience amidst the selling pressure.
On the daily chart, the Relative Strength Index (RSI) resides in negative territory, highlighting the prevalence of sellers. Since reaching overbought levels on February 23, the RSI has declined sharply, indicating a significant weakening in buying momentum. Additionally, the Moving Average Convergence Divergence (MACD) histogram reinforces this bearish outlook, with rising red bars signaling negative momentum in the market.
Crude Oil – China Demand, Production Surges, and Geopolitical Tensions
Crude Oil market witnesses a decline in bidding activity. Despite OPEC’s efforts to restrict production among its members in a bid to stabilize global prices, the impact is overshadowed by tepid demand from China, a key player in the oil market. The anticipated extension of production caps by OPEC fails to counterbalance the surge in output from non-OPEC countries, notably the US. Concerns loom over the lack of significant refining cutbacks, adding pressure to the market.
XTIUSD is moving in Ascending channel and market has reached higher low area of the channel
The mild winter has contributed to lower-than-expected demand for heating oil, leaving inventories relatively intact as the colder months come to an end in the northern hemisphere. Energy markets display signs of impatience as they await a surge in Chinese demand, which has yet to materialize despite the country’s projected growth of 5% in 2024. However, this growth rate, though steady, does not promise a substantial increase in Crude Oil consumption, dampening hopes for a market revival.
Speculation about a potential ceasefire in the Gaza conflict adds to the downward pressure on Crude Oil bids. Additionally, concerns over Houthi rebels’ attacks on civilian cargo ships in the Red Sea have limited market impact, as most shipping routes now avoid the Suez Canal, minimizing disruption to oil transportation.
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