May-26, 2022, Daily Currency market forecast and forex market analysis, By forex forum.
EUR/USD Rises Amid Improved Market Confidence.
On the euro side of the equation, the ECB is increasingly turning against several months ago. The bank now vouches for a policy acceleration and exits from negative interest rates by the end of the third quarter. This pivot could soon open the door to a 50 bps boost and increase support for European currencies, or at least prevent more depreciation. The stars appear to be ready for the EUR/USD recovery going forward in the summer.
Technical analysis EUR/USD
EUR/USD is approaching its best level since late April. After rising in the past few weeks. with the latest advances Both looked ready to test cluster resistance again. It covers from 1.0750 to 1.0800 if the bull can break through this ceiling to an uptrend. Buying interest may accelerate This paves the way for a move towards 1.0940. Conversely, if sellers recover and prices drop. Initial support will be at 1.0642, followed by 1.0470.
Rouble Analysis
On the other hand, The Russian rouble slumped around 10% against the dollar in volatile trade to a two-week low on Thursday as the central bank cut interest rates to 11% and suggested more cuts would follow as inflation risks subside.
The central bank cut its key rate by 300 basis points for the third time in a row, softening the cost of borrowing again after an emergency rate hike to 20% in late February days after Russia sent troops into Ukraine.
At a banking conference in Moscow, Governor Elvira Nabiullina said the central bank had prevented an inflation spiral and would lower its 2022 inflation forecast from 18-23%, reiterating the bank’s signal that it may cut rates further at its next meeting on June 10.
By 1420 GMT, the rouble was around 10% weaker against the dollar at 65.70 , its weakest since May 12 and tumbling from 55.80, its strongest level since February 2018 which it hit on Wednesday.
It had lost 14% to trade at 69.50 versus the euro, also a two-week low, having touched a seven-year high of 57.10 in the previous session.
USD/JPY
Elsewhere, The Japanese Yen has finally been finding some footing against the US Dollar. Over the past two weeks, USD/JPY declined by over 2 percent. That was the worst 2-week period since June 2020. This has been in stark contrast with general Yen weakness going back all the way to the beginning of 2021. Is this near-term noise, or is more smooth sailing ahead for the Japanese currency?
Against the US Dollar, it is a different fundamental story. Both the US Dollar and Japanese Yen exhibit anti-risk dynamics. The more important focus for USD/JPY is thus on relative monetary policy between the Federal Reserve and the Bank of Japan. The latter has not been doing much in terms of shifting its dovish view, but the markets are starting to reprice what the former could do in the future.
USD/JPY TECHNICAL ANALYSIS
With that in mind, traders ought to treat USD/JPY’s recent breakout with a grain of salt. The pair just barely closed under the April 27th low at 126.952. Moreover, the 50-day Simple Moving Average remains in play and can reorient the pair to the upside. Such an outcome would place the focus on 131.256 resistance. Otherwise, confirming a breakout under the SMA could spell further trouble for USD/JPY. That would place the focus on the former 125.108 – 123.862 resistance zone.
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