News and analysis

EURUSD Forecast: the pair is back up to April highs; are March highs next in sight?

US stocks pause for breath after yesterday's rally following cooler CPI data. While the data boosted rate cut optimism, NY Fed President Williams warned that more evidence of inflation cooling was needed in order to cut rates. Separately, Walmart is set to open sharply higher after beating earnings and revenue forecasts.

Despite the slow start to today’s session, the recent price action and improving eurozone sentiment suggests the EUR/USD outlook remains positive, with the exchange rate on course to potentially head towards the 1.10 handle.

USD/JPY falls post-CPI & with jobless claims up next. DAX reaches record high as US CPI euphoria spreads.

US jobless claims data will garner far more interest than usual later Thursday as traders assess whether last week’s unusually large increase was an anomaly or start of a new trend. Testing a key level on the charts, two-way risk created by the data makes GBP/USD a pair to keep on the radar.

On Tuesday I outlined a bullish case for bitcoin futures whilst prices remained above $60k. One soft US CPI and retail sales report later, bullish range expansion has most certainly kicked in.

With unemployment spiking and broader measures of labour market slack increasing, the risk of strong wages growth sparking renewed inflationary pressures looks to have past.

The US dollar suffered its worst day of the year and Fed fund futures now imply with near certainty that the Fed will cut by September. And that saw AUD/USD breakout in style and USD/JPY roll over, breaking below two handles on Wednesday.

With US economic data delivering negative surprises at rates not seen over a year, with signs disinflationary forces are growing, it’s time for a rethink on the outlook for the US dollar. The era of selling rips rather than buying dips may be upon us.