somrat4030
Well-known member
- Apr 27, 2022
- #82
April-27, 2022, Currency market latest forecast, by forex forum.
The US Dollar may sharply rise in the week ahead as market-wide risk aversion grips investors amid the ongoing Russia-Ukraine war and hawkish comments from the Fed. The anti-risk Japanese Yen and Swiss Franc may also get a push higher, though the Greenback’s unparalleled liquidity may give it an edge over its counterparts.
US, EUROZONE CPI AND GDP DATA
Upcoming Eurozone CPI and GDP data could rattle the Euro and exacerbate its losses against the US Dollar if the outcomes convince traders that the ECB may have to reconsider its rate hike plans. Last week, the Euro plunged after central bank President Christine Lagarde said monetary authorities may need to cut the growth outlook as a result of the fallout from the Ukraine war.
Combined with the Fed’s hawkish comments, this saw EUR/USD plunge as money markets increased their bets of ultra-aggressive rate hikes in 2022. US GDP and personal income/spending data will be published this week, and may exacerbate the pair’s volatility if the figures reinforce the Fed’s hawkish outlook.
EUR/USD Technical analysis
EUR/USD is trading at new lows below 1.0620 today after falling notably on the news that Russia has cut gas supplies to Poland. Energy risks are set to hurt EUR further, economists at MUFG Bank report.
Next downside target is early 2017 low of 1.0341
“A wider cut off of supply could see gas prices double from yesterday’s close to around EUR 200 MWh. A wider cut-off would have a significant negative impact on sentiment and would have further negative consequences for the euro.”
In the meantime, the U.S. dollar index, which measures its performance against a basket of six major currencies, rose 0.3% to 102.6, after touching its highest since the early days of the pandemic.
Also supporting the dollar index, traders wager that rates are going up faster in the United States than any other major economy.
"The U.S. dollar benefits from the prospect of an ongoing flight to safety liquidity bid," Jeremy Stretch, head of G10 FX strategy at CIBC, said.
"The U.S. looks set to be less impacted than others, notably Europe and Japan, from the energy price spike. As a consequence of the latter, the Fed remains the most hawkish central bank and the dollar remains well supported, even if it remains rather overbought", he added.
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On the other hand, The pound’s recent demise entered new depths on Tuesday after it sunk into the 1.26 range against a broadly firm dollar for the first time since July 2020.
Concerns about Britain’s economic outlook deepened following the release of government debt numbers and mounting fears that Covid-19 restrictions in China will dent the global economy.
Data from the Office for National Statistics showed that British government borrowing during the 2021/22 financial year was almost 20% higher than the consensus.
The figures highlighted the challenge facing chancellor Rishi Sunak, who is under pressure to offer fresh financial support to households and businesses hit by sky-high inflation, despite the amount of new debt held by the government.
Technical analysis
At the time of writing, GBP/USD is trading at $1.2545, down 0.3% from today’s opening levels.
Elsewhere, The Australian currency is weakening against the yen, pound, and euro but is strengthening against the U.S. dollar.
The prices are under pressure amid new coronavirus restrictions lockdowns in China. Possible blockage of Beijing causes fears in the market that the country will significantly reduce the consumption of raw materials and energy resources, including iron ore and coal, supplied from Australia. Finally, the Australian dollar is facing uncertainty because of the upcoming parliamentary elections, which could well lead to a change of power. According to polls, Scott Morrison’s ruling coalition is currently far behind the opposition, even though the Prime Minister has promised to introduce a number of tax breaks for citizens in case of re-election.
XAUUSD Technical analysis
Technically, Gold Price breached the March 29 lows of $1,890 but found bids just above the end-February lows near $1,880.
Even though XAUUSD is bouncing back towards the $1,900 mark, the 14-day Relative Strength Index (RSI) keeps pointing lower below the midline, suggesting that any recovery attempts are likely to remain shallow.
If bulls succeed in recapturing $1,900 on a sustained basis, then Tuesday’s high of $1,911 could be retested.
Further up, the $1,950 psychological level will be closely followed by XAU bulls.
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