- The US dollar continues to consolidate between 100.50 to 101.98 region as the market is digesting between a 25bps or 50bps cut this coming week during the FOMC.
- US CPI ticks up by +0.28%, higher than the market expectation of +0.2%. Despite the increase, the inflationary pressure continues to be weak and this is still a win for the Federal reserve.
- GBPUSD, EURUSD, AUDUSD rebounded. The Loonie was weakened slightly at the back of weak oil prices.
Rate cut season going on for the G7 economies, ex-Japan. All eyes on Jerome Powell.
Although the start of the Federal Reserve’s easing cycle was never in doubt, there has been ongoing debate about the magnitude of the first interest rate cut in recent weeks. In fact, up until last Wednesday, after the mixed Nonfarm Payrolls report for August was released on September 6, investors shifted their focus toward inflation. The US inflation data, measured by the Consumer Price Index (CPI), released that Wednesday, further confirmed that disinflationary pressures were still intact in August.
Last week we saw the European Central Bank continues to cut its interest rate to 25 basis points, which widen the interest gap between the Feds and ECB. The cut is not unexpected as inflation in Europe continues to dip, particularly Germany. Bank of Canada has committed to cut rate in order to avoid a recession as mentioned by their governor. All in all, we believe that the rate cut season may prop the major currencies higher against the dollar over the longer-term period.
Technical outlook on Dollar index –Corrective rebound may edge higher towards 102.32
The dollar index rebounded as expected from based on our last week’s report dated 26 Aug 2024 and the momentum is stronger than expected and hence, there is a possibility of the Dollar index breaking above 102.32 resistance and target 103.00. Major support remain at 98.45-99.56.
Technical outlook on AUDUSD – Upside resumed
The Aussie dollar rebounded at our support at 0.6622 level successfully based on our last report dated 1 Sep 2024. Below are the key pointers:
- Ichimoku remain in the positive trend reading after prices trends above all its’ indicator.
- Long-term MACD is in an early bullish sentiment.
- The stochastic oscillator continue to rise.
Continue to hold on to buy for AUDUSD. Long-term target price is at 0.7100.
Technical outlook on ERR/USD – Uptrend remain after staying supported above 1.0986
The EUR/USD corrected slightly but managed to stay supported above 1.0986 based on our previous outlook dated 26 Aug 24. Uptrend momentum remains and hence we maintain our bullish outlook on EURUSD Below are the key pointers to note:
- Ichimoku confirmed the bullish upside signal.
- Symmetrical triangle is broken to the upside, which confirms the bullish trend.
- Long-term MACD is showing a clear bearish signal over the longer-term period as histogram is negative.
- Both DM+ and ADX are showing strong signs of bullish strength.
Remain buy on EURUSD and watch for support at 1.0986 for rebound if there’s any correction. Long-term upside target is at 1.1400.
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