#USDCAD,#EURUSD,#GBPUSD #Forexsignal (10 April 2024)

EUR/USD Forex Signal: Forms Double Bottom Ahead of US CPI Data

Bullish view

• Buy the EUR/USD pair and set a take-profit at 1.0975.
• Add a stop-loss at 1.0725.
• Timeline: 1-3 days.

Bearish view

• Set a sell-stop at 1.0845 and a take-profit at 1.0725.
• Add a stop-loss at 1.0925.

US inflation data and FOMC minutes ahead

The EUR/USD pair has rebounded in the past few days even as some analysts hint at a drop to the parity level. Analysts at Bank of America and LBBW believe that the pair has more downside in the coming months.

The main reason for this is that analysts expect that the European Central Bank (ECB) will start cutting interest rates earlier than the Fed. That’s because Europe’s inflation is nearing the bank’s target of 2.0%. The bank will provide hints on when it will start cutting rates in its meeting this week.

There will be no economic data and news from Europe on Wednesday. Instead, focus will be on the upcoming US inflation data.

Economists polled by Bloomberg expect the report to show that the headline Consumer Price Index (CPI) rose by 0.3% in March, translating to a YoY increase of 3.4%. Core inflation is expected to come in at 0.3% MoM and 3.7% on a YoY basis.

If these numbers are correct, it means that inflation has remained stubbornly high. It will also be a sign that the recent disinflation trend has ended. As a result, it will signal that the Federal Reserve will maintain interest rates for longer.

In a statement on Monday, Jamie Dimon, the head of JP Morgan warned that interest rates could remain higher for longer. He expects that rates could even push to 8% since the economy is doing well.

The next important EUR/USD news will be the upcoming Fed minutes. These minutes will provide more information about what the Fed officials deliberated in the last meeting.

EUR/USD technical analysis

The EUR/USD exchange rate has remained in a consolidation phase in the past few days. It was trading at 1.0855, higher than this month’s low of 1.0725. On the daily chart, the pair is consolidating at the 50-day and 25-day Weighted Moving Averages (EMA).

The pair has moved to the strong, pivot and reverse point of the Murrey Math Lines while the histogram of the Percentage Price Oscillator (PPO) has moved above the neutral point. Also, the Relative Strength Index (RSI) has moved above the neutral point.

Most importantly, it has formed a double-bottom pattern. Therefore, the outlook is bullish, with the next point to watch being at 1.0975, its highest swing on March 8th. A break below the support at 1.0725 will point to more downside.

GBP/USD Forex Signal: Rally Fades Ahead of US Inflation Report

Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.2600.
• Add a stop-loss at 1.2750.
• Timeline: 1-2 days.

Bullish view

• Set a buy-stop at 1.2700 and a take-profit at 1.2765.
• Add a stop-loss at 1.2600.

The GBP/USD exchange rate was flat on Wednesday morning as traders waited for the March inflation report. The pair was trading at 1.2680, a few points above this month’s low of 1.2545.

US inflation data ahead

The GBP/USD pair reacted mildly to the statement by Raphael Bostic, the head of the Atlanta Fed. He said that the bank will likely cut rates one time this year because of the strength of the economy and high inflation. He also insisted that he would be open to changing his mind if inflation retreat.

Federal Reserve officials have been divided on when the rate cuts will start. The recent dot plot showed that ten officials expect three or more rate cuts this year. Nine members anticipate two or fewer cuts.

Signs that the Fed will not deliver more cuts continued on Friday when the US published strong jobs numbers. The unemployment rate dropped to 3.8% in March as the economy added over 300k jobs.

Looking ahead, the US will deliver the latest consumer inflation numbers. These are notable figures since they form an important part of the bank’s dual mandate. Economists expect the data to show that the headline inflation rose to 3.4% in March while core CPI moved to 3.7%. These numbers will be higher than the Fed’s target of 2.0%.

The GBP/USD pair will also react to a statement by Austan Goolsbee, the head of Chicago Fed. In a recent statement, he hinted that he was in support of three rate cuts.

The other news will be the minutes of the last Fed meeting. These minutes will provide more information about what the Fed officials said in the second meeting of the year. In that meeting, the members left interest rates unchanged between 5.25% and 5.50%.

GBP/USD technical analysis

The GBP/USD exchange rate has been in a strong uptrend in the past few days. This rebound started after the pair dropped to a low of 1.2535 on Monday last week. It has moved above the crucial resistance point at 1.2667, its highest swing on March 26th.

The pair has jumped above the 50-period Weighted Moving Average and the Ichimoku cloud. Also, the Percentage Price Oscillator (PPO) and the Relative Strength Index (RSI) have all pointed upwards.

The pair’s price action will be influenced by the US inflation data. A strong report will lead to a reversal, which will see it drop to a low of 1.2600. On the other hand, weak inflation figures will lead to more upside.

USD/CAD Forex Signal: To Buy or Sell?

Today's potential signal:

I am a buyer of this pair ONLY. I am interested in a small position near the 50-Day EMA. I would have a stop at 1.3475 below. I would be aiming for a bounce back to the 1.36 level.

• The US dollar initially tried to rally a bit during the early hours on Tuesday only to collapse a bit against the Canadian dollar.
• That being said, we are very much still in a consolidation phase, so I'm not overly pressed about this.
• I think we continue to see more buy on the dip behavior, but it is a bit of a grind.

This does make a certain amount of sense considering that the two economies are so heavily intertwined. Anybody who's ever been to either the peace bridge or the ambassador bridge between the two countries can see just how much trade there really is. It's actually kind of an impressive sight. With that being the case, you don't get massive swings very often, unless of course somebody is caught offside. As things stand right now, crude oil is rallying a bit.

Oil? Not Necessarily.

But I don't think that is going to be a major driver of this USD/CAD pair anytime soon. Keep in mind that the Americans produce a lot of crude oil now, so although it can't help the Canadian dollar, it doesn't necessarily translate the same way against the greenback. The 50-day EMA underneath continues to be a technical support level right along with the 200-day EMA, so I do think it's probably only a matter of time before buyers would show up in that general vicinity.

It would continue the overall up trending channel that we've been in for a while. The 1.3625 level is still an area that I'm paying close attention to because if we can close up there on a daily chart, I think then you have a real shot at going to the 1.38 level. The CPI numbers coming out on Wednesday could have a lot to say as to what happens in this pair next, but keep in mind, it just tends to grind more than anything else, so you're not looking for massive moves most of the time.

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