Mar-31, 2022, Currency Market Weekly Analysis And Latest Forecast, by Forex Forum.
The Federal Reserve's preferred measure of inflation – will hit the screens at 13:30 UK today and is expected to show price pressures ramping up further. The January core reading of 5.2% showed inflation running at its highest level since April 1983 and today's number is expected to climb further, with the market expecting a year-on-year reading of 5.5%. Today's release, if expectations are met or beaten, will stiffen the Fed's resolve to hike interest rates by 50 basis points at the next FOMC meeting in May and, if these price pressures persist, at the June meeting as well.
EUR/USD DAILY PRICE ANALYSIS
Retail trader data show 54.28% of traders are net-long with the ratio of traders long to short at 1.19 to 1. The number of traders net-long is 2.26% lower than yesterday and 13.31% lower from last week, while the number of traders net-short is 7.16% higher than yesterday and 17.62% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current EUR/USD price trend may soon reverse higher despite the fact traders remain net-long.
On the other hand, Donwbeat market mood and falling oil prices weigh on the USD/CAD
Global equities keep trading in the red for the second straight day as Russia's President Vladimir Putin signed a decree on natural gas, which has to be paid in Roubles and would begin on April 1. Furthermore, Putin's added that proceedings in euros or US dollars could also be blocked while emphasizing that Russia will supply gas at agreed-upon volumes and prices. However, he reiterated that active contracts will be halted if demands are not met.
USD/CAD Price Forecast: Technical outlook
The USD/CAD keeps trading downwards, as shown by the daily chart. Thursday's price action reached a daily high at around 1.2533, but in the North American session, it gave back those gains and meandered around the 1.2480s highs. That said, the downtrend is intact unless the USD/CAD breaks above 1.2613, the 200-day moving average (DMA), and the top of the 1.2450-1.2600 range.
The USD/CAD first support would be March 25 daily low at 1.2465. A breach of the latter would expose January 12 low at 1.2447, followed by November 10, 2021, daily low at 1.2387.
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Elsewhere, The Russian ruble was steady at around 81 per USD on Thursday, not far from levels seen before Russia's invasion of Ukraine, after President Putin signed a decree mandating that foreign purchases on Russian natural gas must be made in rubles.
Under the decree, gas purchases are to be made through transactions from Russian banks, many of which were hit by sanctions. Western leaders rejected the move, stating it is a breach of contract. The ruble fell to as low as 150 per dollar earlier in March as the West imposed unprecedented levels of sanctions against the Russian economy, with a US-led ban on the country's energy exports. The currency has since staged a dramatic rebound after the Russian central bank raised its key interest rate to 20% and Moscow imposed strict capital controls to keep businesses and individuals from selling rubles.
On the other hand, The pound gained some traction on Wednesday having slipped to its lowest level (1.3055) in almost two weeks versus the dollar the previous day – climbing to the 1.31 mid-range as the US currency weakened.
Bank of England (BoE) Deputy Governor Ben Broadbent had some cautionary words for policymakers on Wednesday, who he said should be clear about how they plan to react to changes in the economy – warning against guidance that could be viewed as promises about future policy action.
Speaking at the National Institute of Economic and Social Research, Broadbent said: "Expectations of future interest rates affect current demand and policymakers clearly have an interest in their behaving appropriately as economic news comes in,"
The UK economy grew by 1.3% at the end of 2021 despite a cost-of-living squeeze on household spending – and is now estimated to be 0.1% below its pre-pandemic level. The consensus expected it to post a 1% increase.
Elsewhere, The USDCHF has moved back below both its 100 and 200 day MA at 0.92335 and 0.92105 respectively. Yesterday, the 100 day MA was broken but the price moved back above that MA line in the Asian session.
However, the price restarted to break back to the downside in the US session today and that has seen the run below both MA levels. Staying below the MA would give the sellers more confidence for more downside. There is a bunch of up and down swing levels down to the Feb 21 and Feb 28 lows near 0.9149 level on further selling pressure.
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