XtreamForex | Daily Technical Analysis

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EUR/USD Holds Below 1.1000 as Markets Await Eurozone GDP and US CPI Data

The EUR/USD pair is trading flat around 1.0990 during the early European session on Wednesday, as traders remain cautious ahead of the release of key economic data from both the Eurozone and the US. The focus is on the Eurozone’s Gross Domestic Product (GDP) for the second quarter (Q2) and the US Consumer Price Index (CPI) for July, which are expected to provide direction for the currency pair.

On Tuesday, data from the US Bureau of Labor Statistics showed that the Producer Price Index (PPI) for final demand rose by 2.2% year-on-year (YoY) in July, down from 2.7% in June and below the expected 2.3%. On a monthly basis, the PPI increased by 0.1% in July, following a 0.2% rise in June. The Core PPI, which excludes volatile food and energy prices, rose by 2.4% YoY in July, down from 3.0% in June and lower than the market consensus of 2.7%.

The market is currently pricing in a 25 basis point (bps) rate cut by the Federal Reserve (Fed) in September, with a 50 bps cut not entirely ruled out, depending on upcoming data. Atlanta Fed President Raphael Bostic expressed increased confidence on Tuesday that the Fed can achieve its 2% inflation target, but he emphasized the need for more evidence before supporting a rate cut.

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USD/CHF Dips Below 0.8750 Amid Risk-On Sentiment and Weaker US Dollar

The USD/CHF pair is trading lower, hovering around 0.8715 during the early European session on Friday. This decline is attributed to a softer US Dollar (USD). Meanwhile, the US Dollar Index (DXY), which measures the value of the USD against a basket of major currencies, is down 0.12% for the day, trading around 102.92.

Speculation about a potential rate cut by the US Federal Reserve in September continues to weigh on the Greenback. However, expectations of deeper rate cuts have lessened due to positive US Initial Jobless Claims and strong Retail Sales data reported on Thursday. According to the CME FedWatch Tool, financial markets now see nearly an 80% chance of a rate cut in September, with expectations of 200 basis points of reduction over the next 12 months, although this outlook remains data-dependent.

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EUR/USD Steady Near 1.1100, Close to Eight-Month Highs

The EUR/USD pair is holding around 1.1080 during Tuesday’s Asian session, after easing back slightly from an eight-month high of 1.1087. This minor pullback is linked to a stronger US Dollar (USD) amid a rise in risk-averse sentiment. However, the USD might face challenges ahead as the likelihood of a 25 basis point rate cut by the US Federal Reserve (Fed) in September increases.

The CME’s FedWatch Tool indicates a 23.5% chance of a 50 basis point rate cut by the Fed, with a 76.5% probability of a 25 basis point cut in September.

On Monday, Minneapolis Fed President Neel Kashkari mentioned that discussions about potential interest rate cuts in September would be appropriate, citing concerns over a weakening labor market, according to Reuters.

The upcoming Jackson Hole Economic Symposium, starting Thursday, will be closely watched, particularly for Fed Chair Jerome Powell’s speech on Friday.

In the Eurozone, investors are waiting for key data on business activity and consumer prices that could impact the European Central Bank’s (ECB) decision in September. It is expected that the ECB will gradually reduce interest rates, though policymakers remain cautious about committing to a specific path due to the risk of price pressures rising again.

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EUR/USD Rises Above 1.1150 Amid Market Optimism

The EUR/USD pair has rebounded from its recent losses, trading around 1.1170 during Tuesday’s Asian session. This recovery is fueled by growing market optimism following comments from U.S. Air Force General C.Q. Brown, chairman of the Joint Chiefs of Staff, who told Reuters that fears of a wider conflict in the Middle East have eased after his three-day visit to the region.

While there was an exchange of fire between Israel and Lebanon’s Hezbollah, it did not lead to further escalation. However, Hamas has rejected new ceasefire conditions proposed by Israel in negotiations held in Egypt, insisting on adherence to terms set by U.S. President Joe Biden and the UN Security Council.

On the monetary policy front, San Francisco Federal Reserve President Mary Daly indicated in a Bloomberg TV interview that it might soon be time to cut interest rates, potentially starting with a quarter-point reduction. Daly mentioned that if inflation continues to decrease gradually and the job market maintains steady growth, a more regular policy adjustment would be appropriate.

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USD/CHF weakens below 0.8500, eyes on Swiss CPI, GDP data

The USD/CHF pair declines towards 0.8490 during early European trading on Monday. This drop is driven by a weaker US Dollar (USD) amid rising expectations that the US Federal Reserve (Fed) might cut interest rates in its September meeting. Upcoming economic data from Switzerland, including the August Consumer Price Index (CPI) and second-quarter Gross Domestic Product (GDP), are scheduled for release on Tuesday. The Swiss economy is expected to grow by 0.5% quarter-on-quarter in Q2.

The Fed’s dovish stance continues to pressure the US Dollar. Last week, Atlanta Fed President Raphael Bostic, a noted hawk on the Federal Open Market Committee (FOMC), suggested it might be time to reduce borrowing costs due to easing inflation and a higher-than-expected unemployment rate.

Alex Ebkarian, Chief Operating Officer at Allegiance Gold, noted that the latest Personal Consumption Expenditures (PCE) report indicates that inflation is no longer the Fed’s primary concern. Instead, the Fed’s focus has shifted to unemployment data, reinforcing the possibility of rate cuts in September. Investors will pay close attention to the US employment data set for release on Friday, which includes the Nonfarm Payrolls (NFP), Unemployment Rate, and Average Hourly Earnings for August.

Projections for NFP suggest 163,000 job additions in August, while the Unemployment Rate is expected to decrease slightly to 4.2%. Any signs of weakness in the US labor market could increase expectations for a Fed rate cut, putting additional downward pressure on the USD.

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Australian Dollar Holds Losses Despite Hawkish RBA Bullock, ISM Manufacturing PMI in Focus

The Australian Dollar (AUD) remains under pressure against the US Dollar (USD) despite positive Trade Balance data released on Thursday. Australia’s trade surplus widened to 6,009 million AUD in July, surpassing both the expected 5,150 million and the prior figure of 5,589 million.

Reserve Bank of Australia (RBA) Governor Michele Bullock addressed “The Anika Foundation” in Sydney, discussing “The Costs of High Inflation.” She emphasized that it is premature to consider rate cuts, and the RBA board does not foresee reducing rates in the near term.

The Australian Dollar weakened further as recent economic data revealed that Australia’s Gross Domestic Product (GDP) grew in the second quarter but missed market expectations. Additionally, a private survey indicated that Australia’s manufacturing activity remained contractionary in August, marking two consecutive years of deterioration in the sector.

In the US, the Dollar softened after July’s US JOLTS Job Openings fell below expectations, highlighting a slowdown in the labor market. Meanwhile, the ISM Manufacturing PMI confirmed that factory activity contracted for the fifth straight month.

Investors are now focused on the upcoming US ISM Services PMI and Initial Jobless Claims, both scheduled for release on Thursday. Attention will then shift to Friday’s US Nonfarm Payrolls (NFP), which could provide further insight into the Fed’s potential rate cut this month.

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GBP/USD Gains Momentum Above 1.3150 Ahead of US NFP Data

The GBP/USD pair continues to strengthen, trading near 1.3180 during Asian hours on Friday, marking its third consecutive day in positive territory. The persistent weakness of the US Dollar (USD) is providing support for the pair. However, traders are eagerly awaiting the release of the US August Nonfarm Payrolls (NFP) data, which is expected later today.

On Thursday, the Automatic Data Processing (ADP) report showed that private sector payrolls in the US grew at their slowest rate in over three and a half years, with only 99,000 jobs added in August. This figure was lower than the downwardly revised 111,000 in July and well below the forecast of 145,000.

The market expects the Federal Reserve (Fed) to lower interest rates during its September 17-18 meeting. With the Bureau of Labor Statistics set to release the NFP data, which is projected to show 160,000 job additions in August, this report will be a key factor in shaping expectations for the Fed’s next policy move. A weaker-than-expected NFP could lead to a larger rate cut, further weakening the USD.

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USD/CHF Rises Above 0.8450 as Traders Anticipate US PCE Data

The USD/CHF pair gained traction on Friday, climbing to around 0.8485 during the early European session. This move comes as the Swiss Franc (CHF) weakens, following the Swiss National Bank’s (SNB) decision to lower interest rates on Thursday. Traders are now focused on the upcoming release of the US Personal Consumption Expenditures (PCE) Price Index, scheduled for later in the day.

The SNB reduced its interest rate by 25 basis points (bps), bringing the policy rate down to 1.00%, marking the lowest level since early 2023. Analysts at Goldman Sachs explained that the SNB’s rate cut was influenced by reduced inflationary pressures, largely due to a stronger CHF and other factors. They also predict an additional 25 bps cut in December, pointing to the bank’s dovish stance and updated inflation projections.

On the US side, better-than-expected economic data on Thursday has bolstered the US Dollar (USD) against the CHF. Initial Jobless Claims for the week ending September 21 increased to 218K from the previous week’s revised figure of 222K (originally 219K). This was below the expected 225K. Additionally, US Durable Goods Orders remained flat in August, following a 9.9% increase in July, outperforming the anticipated 2.6% decline.

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EUR/USD Climbs Above 1.1150 on Rising Prospects of Fed Rate Cuts

EUR/USD started the week on a positive note, trading around 1.1170 during the Asian session on Monday. This uptick can be attributed to a weakening US Dollar (USD), driven by expectations of continued policy easing from the US Federal Reserve in November.

On Friday, the US Core Personal Consumption Expenditures (PCE) Price Index for August increased by 0.1% month-over-month, missing market expectations of a 0.2% rise and coming in lower than the previous 0.2% increase. This aligns with the Federal Reserve’s outlook that inflation is easing, reinforcing the potential for an aggressive rate-cutting cycle. Meanwhile, the year-over-year Core PCE rose by 2.7%, matching forecasts and slightly surpassing the prior 2.6%.

According to the CME FedWatch Tool, markets now see a 42.9% chance of a 25-basis-point rate cut in November, with the odds of a 50-basis-point cut rising to 57.1%, up from 50.4% a week ago.

St. Louis Federal Reserve President Alberto Musalem suggested the Fed could begin cutting rates “gradually,” starting with a more substantial reduction at the September meeting. Musalem also noted the possibility of the economy weakening more than expected, which could prompt a faster pace of rate cuts.

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EUR/USD Posts Modest Gains Above 1.1050, Traders Eye US ADP Report

The EUR/USD pair is experiencing slight gains, trading around 1.1070 during Asian trading hours on Wednesday. However, any escalation in geopolitical tensions, particularly in the Middle East, could weigh on risk-sensitive assets like the Euro (EUR). Investors are also focusing on the US ADP Employment Change data for September, expected later today.

Traders are still evaluating the likelihood of a significant rate cut by the US Federal Reserve (Fed) in November, following remarks from Fed Chair Jerome Powell. He indicated that the Fed is in no rush to reduce its benchmark rate, stating it would happen “over time.” Currently, markets are pricing in a 37.4% probability of a 50 basis points (bps) cut in November, while a 25 bps reduction has a higher chance at 62.6%, according to the CME FedWatch Tool.

Weak US economic data from Tuesday has put pressure on the US Dollar. The ISM Manufacturing PMI for September remained unchanged at 47.2, falling short of expectations of 47.5 and signaling ongoing contraction in the US manufacturing sector.

In the Eurozone, inflation slowed in September, dropping below the European Central Bank’s (ECB) target. The Harmonized Index of Consumer Prices (HICP) rose by 1.8% year-over-year in September, down from 2.2% in August, according to Eurostat.

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