In today’s Forex Forecast, we discuss the outlook for EUR/USD, USD/JPY and Gold prices, with Richard Perry, Market Analyst at Hantec Markets.
EUR/USD: Shifting Fed rate hike expectations, and the ECB risk
Perry notes that the recent downward correction in EUR/USD due to US CPI data release will prove temporary as the recent fundamental data paints a soft picture for the economy, and will weaken the dollar ahead.
On rate hike expectations, he says that the possibility of a December Fed rate hike are slim and the futures are now pricing in a March 2016 rate hike.
The EUR has strengthened throughout this year. Perry adds that 1.11 pivot remains a key support level while near-term 1.13 will support the pair.
Although the ECB reaction to this EUR strength will be key, Perry believes that the pair will hold up nicely and will remain trapped in a choppy range.
USD/JPY: Deteriorating momentum
The USD/JPY cross saw a move below 118.30 but failed to close below it, which could have been the downside trigger to the directionless pair, according to Perry. He adds that the momentum on the cross has been deteriorating, having fallen below the longer-term MA, and seeing selling on strength.
Perry believes that as the market pushes out the Federal Reserve rate hike expectations into 2016, the cross is going to head lower.
Gold price: On the yellow metal, Perry notes that although the technical charts show the Gold has broken above its downtrend line and long-term moving average, further confirmation is required before further upside can be predicted.
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