Topic: Trade Bitcoin with FreshForex - page 5. (Read 3875 times)

The GBP/USD pair started the new trading week with a fresh dip on Monday, aiming for 1.2700, but then recovered and ended the day not far from where it started, just below 1.2800. Markets reversed course and piled on the dollar in early trade after US data came in below expectations, reinforcing broad market bets on an acceleration in the pace of rate cuts by the Federal Reserve (Fed) before the end of the year.

According to CME's FedWatch tool, betting markets are pricing in a nearly 85% probability of a double 50 basis point Fed rate cut on September 18 after U.S. data changed on Friday and new mixed prints emerged on Monday. The rest of the trading week will be light in terms of economic data, giving markets some respite and time to contemplate the current stance.

The US Purchasing Managers' Composite Index (PMI) for July came in below expectations on Monday, falling to 54.3 against a forecast of remaining at 55.0. However, the ISM Services PMI for the same period accelerated to 51.4, beating the forecast of 51.0 and rising above the previous reading of 48.8 to return to growth territory above 50.0. However, the ISM Sevices Prices Paid index for July accelerated to 57.0 from 56.3, beating the market's forecast to 55.8. The dollar is still expected to be able to strengthen ahead of the Fed rate change.

Trading recommendation: Trade predominantly with Sell orders from the current price level

The EUR/USD continues to demonstrate a robust performance in the early Asian session on Monday, with the pair trading near 1.0915. The growth of the major pair is being driven by the weakening of the dollar in response to disappointing US employment data. Traders will be monitoring the release of the US ISM Services PMI from ISM later on Monday.

The slower pace of job growth and higher unemployment rate in the US have contributed to concerns about a potential slowdown in the overall economy, leading to a negative impact on the US dollar. The US Labor Department reported on Friday that non-farm payrolls (NFP) rose by 114,000 jobs in July, down from a downwardly revised 179,000 in June and below the forecast of 185,000. Furthermore, the unemployment rate increased to 4.3%, representing the highest level since October 2021.

Despite concerns about a potential US recession, Federal Reserve (Fed) Chairman Jerome Powell stated last week that the central bank's confidence in a "robust" economy and the softening of inflation data are increasing the likelihood of a rate cut in the near future. The CME FedWatch Tool indicates that financial markets have fully priced in the possibility of a rate cut of at least 25 basis points at each of the Fed's three remaining meetings this year.

In overseas markets, higher inflation and solid growth in the Eurozone economy have prompted a shift in expectations for further interest rate cuts this year. Headline HICP reached 2.6% y/y in July, exceeding the consensus forecast of 2.4%. Core HICP, which excludes volatile items such as food, energy, alcohol and tobacco, rose by 2.9% against expectations of 2.8%.

Trade recommendation: Trading predominantly Buy orders from the current price level.

The USD/JPY pair is trading at approximately 149.40 during the Asian session on Friday, having rebounded from the four-month low of 148.50 recorded on Thursday. The increase in the USD/JPY pair can be attributed to the strength of the US dollar (USD), which can be attributed to a strengthening risk-off sentiment following the release of recent industrial production and employment data that raised concerns about the health of the US economy.

The US dollar (USD) is receiving support as markets remain in a fragile equilibrium. However, the economic slowdown is leading to growing expectations of a rate cut by the Federal Reserve. CME's FedWatch tool indicates that traders are fully aware of the possibility of a 25-basis-point rate cut on 18 September. Furthermore, market participants are awaiting the release of US non-farm payroll employment and average hourly earnings data for July, due later in the North American session.

The Purchasing Managers' Index (PMI) for the US manufacturing sector, as reported by the ISM, reached an eight-month low of 46.8 in July, down from 48.5 in the previous month and below the projected figure of 48.8. The number of initial jobless claims in the US for the week ending 26 July increased to 249,000 from 235,000 the previous week, exceeding the forecasted rise to 236,000.

The Japanese Yen (JPY) received a boost following the Bank of Japan's (BoJ) decision to raise the discount rate to a 16-year high of 0.25%. The move, along with the BoJ's indication that further rate hikes may be necessary to meet economic demands, could result in a JPY appreciation. Market expectations now factor in two additional rate hikes before the end of the fiscal year in March 2025, with the next hike expected in December. This outlook could limit the potential for the USD/JPY pair to appreciate further.

Trade recommendation: Trading mainly by Sell orders from the current price level.

The remaining days of this week mark the beginning of August, making it one of the most eventful weeks of 2024! The Federal Reserve, the Bank of England, and the Bank of Japan are making crucial economic decisions impacting global financial markets.

Key economic indicators, including changes in interest rates and the highly anticipated U.S. Nonfarm Payrolls report, will also be released this week.

Track all events across countries in our Forex Economic Calendar.

At the same time, stock market investors are focused on the current U.S. corporate earnings season, with special attention to whether the hype around AI is really coming to an end.

Given the significant drop in U.S. stock prices last week, analysts will be closely watching the financial reports of major corporations this week. If tech giants like Meta (formerly Facebook), Apple, Amazon.com, AMD, and Intel maintain optimistic AI-related revenue forecasts, it could trigger a broader stock market recovery.

For crypto traders, the main event last week was Donald Trump's speech at a Bitcoin conference. Here are the key points from his speech:

* Bitcoin is the ninth most valuable asset in the world. One day, it will surpass gold in market capitalization.
* If we don't embrace crypto technologies, China will outpace us. I want the U.S. to lead in technology and all other sectors.
* The United States will become the crypto capital of the planet.
* Trump confirmed his intentions to make the U.S. a more favorable jurisdiction for crypto business, including mining.
* Trump stated that he would create a strategic national reserve of bitcoins if elected.

Such bold rhetoric around cryptocurrencies only increases investor interest, injecting new money flows into the crypto world.

Don't miss the chance to invest in key market trends and earn with FreshForex. To help you get started, we are offering a 10% bonus on your balance with your first cryptocurrency deposit!

The Pound-Dollar pair is unable to capitalize on the positive movement following the FOMC meeting and is fluctuating in a narrow trading range during the Asian session on Thursday. Spot prices are currently trading around the mid-1.2800s, almost unchanged for the day as traders prefer to take a wait-and-see approach in anticipation of the Bank of England (BoE) policy update.

Signs that global inflationary pressures are easing have fueled speculation that the UK central bank will cut interest rates later today. In fact, financial markets estimate the likelihood of the Bank of England cutting rates from a 16-year high of 5.25% to be more than 65%, and expect another quarter-point cut before the end of the year. This, in turn, will help to strengthen the British Pound (GBP) and boost the GBP/USD pairing.

However, investors are far from confident that the Bank of England will take immediate action as UK services inflation remains uncomfortably high. This, in turn, is deterring traders from placing fresh directional bets on the GBP/USD pair and resulting in a subdued range of price action. As such, the focus will be on the accompanying monetary policy statement and comments from Bank of England Governor Andrew Bailey at the post-meeting press conference.

Ahead of a key central bank risk event, the US Dollar (USD) selling bias following the FOMC meeting continues to provide some support for GBP/USD and should help limit the downside. The US central bank acknowledged recent progress in inflation and a cooling in the labor market. In addition, Fed Chairman Jerome Powell signaled the likelihood of a rate cut soon if inflation remains in line with expectations and led to a decline in US Treasury yields.

Trading recommendation: Trade predominantly with Buy orders from the current price level.

EUR/USD is trading around 1.0820 this morning. The main pair is declining amid risk-aversion and weaker-than-expected preliminary Q2 Gross Domestic Product (GDP) data from Germany. Traders are opting for a wait-and-see approach ahead of the Federal Reserve's (Fed) interest rate decision on Wednesday.

Germany's economy contracted again by 0.1% quarter-on-quarter in the second quarter after growing by 0.2% in the first quarter, the first estimate released by Destatis on Tuesday showed. The figure was weaker than the 0.1% increase expected. Meanwhile, annualized Gross Domestic Product (GDP) fell 0.1% in the second quarter, compared to a 0.2% contraction in the first quarter and a forecast of 0%. The euro (EUR) exerted some selling pressure amid weak German GDP data.

Nevertheless, the Eurozone economy grew 0.3% in the three months to the end of June, above the market consensus of 0.2% growth on a quarterly basis. Preliminary Eurozone inflation data and German retail sales will be released today. This data may provide some hints of a September rate cut by the European Central Bank (ECB).

Overseas, the Federal Reserve is expected to keep interest rates unchanged at its two-day meeting on Wednesday. However, markets widely expect the U.S. central bank to start easing policy at its next meeting in September as inflation is falling faster than anticipated in June. “At this point, a modest 25 basis point rate cut in September seems likely. If all goes well, we could even see two additional 25 basis point rate cuts before the end of 2024,” said Jacob Channel, chief economist at LendingTree.

Trading recommendation: Trade mainly with buy orders at the price level of 1.0860. We consider sell orders at the price level of 1.0795.

The USD/JPY currency pair is trading at a low level near 153.90 in the early Asian session on Tuesday. The pair saw gains reduced after retreating from 153.35, amid a risk-off sentiment and growing speculation of a rate hike by the Bank of Japan (BoJ). The interest rate decisions by the Bank of Japan (BoJ) and the Federal Reserve (Fed) on Wednesday will be of particular interest ahead of the US jobs data on Friday.

It is not anticipated that the US Federal Reserve will cut interest rates at its meeting this week, but it is expected that the groundwork for policy easing will be laid at the meeting scheduled for September. The CME FedWatch Tool data indicates that the probability of a Fed rate cut in September is now 100%, reflecting a quarter-percentage point reduction at the very least. The likelihood of a Federal Reserve interest rate cut is continuing to exert downward pressure on the US dollar against the Japanese yen in the near term.

In contrast, a Reuters poll of economists indicates that the Japanese central bank will increase rates by 10 basis points (bps) to 0.1%. ING has indicated that the BOJ may opt to raise rates by 15 basis points while simultaneously reducing its bond-buying programme. Strategists at OCBC FX have commented that the combination of BoJ policy normalisation and a possible Fed rate cut in the near term is an example of monetary policy convergence and should support USD/JPY to the downside.

Trade recommendation: Trading mainly by Sell orders from the current price level.

The Pound-Dollar pair is trading on a stronger note around 1.2875 in the early hours of European trading on Monday. The dollar's decline amid hopes of an interest rate cut by the US Federal Reserve (Fed) in September is providing some support to the major pair. The US Federal Reserve (Fed) interest rate decision will be published on Wednesday, no changes in the rate are expected.

Most analysts and traders expect the Fed to leave the interest rate unchanged at its next meeting on Wednesday. The U.S. Federal Reserve may signal this week that an interest rate cut is around the corner, although many expect it to hold rates steady until its next rate decision in September. Investors now see the first rate cut coming by mid-September, estimating a 100% Fed rate cut of at least a quarter percentage point by then, according to CME FedWatch Tool data.

Traders will also be watching the FOMC press conference closely for new stimulus. A dovish FOMC tone could undermine the US Dollar and create a tailwind for GBP/USD.

As for the British Pound, the Bank of England may cut interest rates at its August meeting on Thursday, which would be the first rate cut since 2020. Markets are predicting a 50% probability of a quarter-point rate cut on Thursday, although opinions are divided on whether the cut will happen now or at the next meeting in September.

Trading recommendation: Trade in the 1.2840-1.2885 channel on a bounce from the levels.

For the fourth day, the news has been buzzing about the launch of Spot Ethereum ETFs (Exchange-Traded Funds). Everyone expected a huge influx of capital and that the price would skyrocket! On the first day alone, ETH-ETF surpassed $200 million!

But we didn't rush with the news, as in the meantime, the ETHUSD price dropped by 10%...

What happened?

Ethereum failed to hold above the critical support level of $3250, leading to a drop below $3150. This forced traders to reassess their strategies, considering the high volatility of the cryptocurrency. The simultaneous drop in Bitcoin and other cryptocurrencies further exacerbated investor uncertainty, prompting many traders to close their positions out of fear.


What factors are the loud media not considering?

Sell-offs by major holders: According to Farside Investors, on the first day of trading after the launch of the Ethereum-based ETF, the Grayscale Ethereum Trust (ETHE) lost $484.1 million. Farside Investors did not provide data on the iShares Ethereum Trust ETF (ETHA) created by Blackrock. However, according to the information published on the derivative's website, ETHA's capitalization level fell by $25,558 due to a 0.23% drop in share price.

Political uncertainty: For instance, the nominee for chairman of the Financial Services Commission (FSC) of South Korea, Kim Byung Hwan, urged the government to be cautious with the launch of spot ETFs linked to cryptocurrencies.

Everyone who wanted to buy has already bought: Some experts believe that since the 180-degree shift in the SEC's stance, all investors who wanted to buy Ethereum have already done so and hold ETH as an investment, primarily on the spot market.


However, FreshForex analysts believe that in the long run, Ethereum will inevitably rise. Once investors see real reasons for new purchases, not just the hype around the ETF launch, the influx of funds will stabilize and the price will start to increase. Currently, the price has fallen significantly close to the important psychological level of $3000, but a strong rebound has timely appeared. If you want to profit from future growth, buying at a lower price is a great entry point!

The Pound-Dollar pair consolidated near 1.2860 on the back of a weaker US Dollar, breaking a three-day losing streak during Asian trading on Friday. However, the upside potential of the major pair seems limited as market participants expect the Bank of England (BoE) to cut interest rates in August.

The U.S. economy grew faster than expected in the second quarter, according to the U.S. Commerce Department's preliminary estimate released on Thursday. U.S. gross domestic product (GDP) grew at an annualized rate of 2.8% in the second quarter, marking an acceleration from 1.4% growth in the first quarter. The figure was above the forecast of 2%.

Nevertheless, expectations for a September interest rate cut by the Federal Reserve (Fed) remain unchanged. Traders will be closely watching the release of US Personal Consumption Expenditures (PCE) data for June, which is due on Friday.

In addition, weekly U.S. initial jobless claims for the week ended July 20 rose 235,000 from the previous week's 243,000. The figure was below the consensus forecast of 238,000. Meanwhile, U.S. durable goods orders fell 6.6% in June compared to May's 0.1% increase, which was weaker than expectations of 0.3%.

As for the British pound, the Bank of England (BoE) is expected to cut the bank rate to 5% at its August meeting next week as inflation is expected to be near the central bank's target, according to most economists polled by Reuters. In addition, analysts at UBS said the Bank of England is expected to make its first rate cut of 25 basis points (bps) in early August and another 25 bps in November, bringing the interest rate to 4.75% by the end of 2024. “The key reason why we expect the MPC to cut rates is the recent data,” said UBS analysts.

Trading recommendation: Watch the level of 1.2860, on the rebound take Sell positions. If we consolidate above, take Buy positions.

EUR/USD is down by a third of a percent on Tuesday as investors are in anticipation of the twin bloc of purchasing managers' indices (PMIs) due out today in the EU and the US.

The pan-European PMI data will start the early European session on Wednesday and markets are expecting a slight rise in the EU services PMI to 53.0 in July after June's reading of 52.8.

In the U.S., the U.S. Services PMI for July is expected to decline slightly to 54.4 from June's reading of 55.3. Global markets are widely expecting a rate cut by the Federal Reserve (Fed) in September, and investors are closely monitoring US economic data looking for further signs of easing to confirm the rate outlook. Traders currently estimate a nearly 100% chance that the Federal Open Market Committee (FOMC) will cut rates by at least a quarter point during its September 18 meeting.

This week, quarterly US Gross Domestic Product data is scheduled for Thursday and Personal Consumption Expenditures (PCE) price index inflation is scheduled for Friday. U.S. second-quarter GDP is forecast to rise to an annualized rate of 1.9% from 1.4%, while core PCE inflation on Friday is expected to fall further to an annualized rate of 2.5% for the year ended June, down from 2.6% the previous month.

Trading recommendation: Watch the level of 1.0840, on the rebound take Buy positions. If it is consolidated below, take Sell positions.

The Japanese Yen (JPY) continues to rise for the second consecutive session on Tuesday, which could be due to increased risk aversion. Traders are evaluating next week's Bank of Japan (BoJ) interest rate decision, where an interest rate hike could support the Japanese Yen.

Toshimitsu Motegi, a senior ruling party official, called on the Bank of Japan (BoJ) to more clearly outline its plan to normalize monetary policy by gradually raising interest rates, stressing that the yen's excessive fall is hurting the economy, according to Reuters. Prime Minister Fumio Kishida added that normalizing the central bank's monetary policy will support Japan's transition to a growth-oriented economy.

The USD/JPY pair is facing challenges as the U.S. dollar (USD) is struggling due to growing expectations of a Federal Reserve (Fed) rate cut in September. Federal Reserve (Fed) Chairman Jerome Powell noted that he is increasingly hopeful of progress on inflation in recent months. Meanwhile, Fed Chairman Christopher Waller said that the time for a discount rate cut is approaching.

Trade recommendation: Trading predominantly Sell orders from the current price level.

The Pound-Dollar pair attracted some buying during the Asian session on Monday and for the time being seems to have paused its corrective decline from the 1.3045 area, or the yearly peak reached last week. Spot prices are currently trading around 1.2930, up more than 0.10% on the day, although they remain near the weekly low set last Friday.

The US Dollar (USD) is starting the new week on a weak note, reacting to political events in the US over the weekend, and is proving to be a key factor providing some support to the GBP/USD pair. After a long week of political turmoil, US President Joe Biden has declined to run in the 2024 presidential election. This in turn raises the chances of Donald Trump becoming the next US President, which, along with bets that the Federal Reserve (Fed) will cut interest rates in September, increases investor appetite for riskier assets and undermines the safe-haven US Dollar.

The British Pound (GBP), on the other hand, continues to receive support from Bank of England (BoE) policy in August. In fact, Bank of England Chief Economist Hugh Pill noted earlier this month that there is still some work to be done before the domestic permanent component of inflation disappears. To add to this, UK consumer inflation rose slightly more than expected in June, up 2% year-on-year. This came on the back of better than expected GDP growth of 0.4% in May and led investors to abandon expectations of a rate cut soon.

On Monday, no market-important economic data will be released either from the UK or the US, so the GBP/USD pair will be at the mercy of the USD price dynamics. Thus, the market's attention will remain focused on political events in the US, which will determine the broader risk sentiment and influence the buck's exchange rate. Nevertheless, the aforementioned fundamental background seems to be leaning in favor of bullish traders and supports the prospects for further intraday growth of the currency pair.

Trading recommendation: Trading predominantly Buy orders from the current price level.

Following the release of the latest inflation data on Friday, the Japanese Yen (JPY) has remained stable. The Japanese national consumer price index (CPI) for June remained unchanged at 2.8%, matching the previous month's reading and remaining at its highest level since February. Meanwhile, the core CPI increased to 2.6%, representing a slight rise from the previous reading of 2.5%. However, this figure remains below the consensus forecast of 2.7%.

Japan's 10-year government bond yield is currently trading at around 1.04%, having recovered from three-week lows. The recovery followed an announcement by Digital Minister Kono Taro in an interview with Bloomberg that the Bank of Japan (BoJ) is expected to raise interest rates again in July to support the yen. Furthermore, the Bank of Japan is anticipated to disclose its strategy for reducing bond purchases this month.

The USD/JPY pair saw a 4% decline from its 38-year high of 161.95 in July. Analysts believe that this decline can be attributed to intervention by Japanese authorities. It is anticipated that traders will remain vigilant with regard to the possibility of further interventions.

The US dollar is receiving support from a slight increase in US Treasury bond yields. However, the potential for dollar gains may be constrained by the release of soft labour market data, which is likely to reinforce market expectations of a September rate cut decision by the Federal Reserve (Fed).

Trade recommendation: We follow the level of 158.00, when fixing above it we take Buy positions, when rebounding we take Sell positions.

On Wednesday, the GBP/USD pair reached new highs, testing chart territory above 1.3000. The prospect of a Federal Reserve (Fed) rate cut in September supported the US dollar and provided a boost to the pound sterling (GBP) in the midweek market session. The recent comments from the Federal Reserve have been perceived as dovish, with market participants interpreting the signals from the Fed officials as an acknowledgement of the progress made on inflation.

The betting markets are fully priced for a quarter-point rate cut when the Federal Open Market Committee (FOMC) meets on 18 September, with rates expected to remain unchanged at the end of the July meeting. The CME's FedWatch tool indicates a 98% probability of a September rate cut, with traders anticipating three rate cuts in 2024, compared to the Fed's more conservative outlook of one or two.

The final UK Consumer Price Index (CPI) inflation data, released early on Wednesday, came in within the expected range, offering little cause for concern among GBP traders. However, a sharper-than-forecast decline in the Producer Price Index (PPI) briefly exerted pressure on the Pound. The latest Producer Price Inflation figures show a decline of 0.3% on a month-on-month basis in June, down from the previous month's revised figure of 0.0%. This is in stark contrast to the forecasted rise to 0.1%.

While there is a growing consensus in the market that a rate cut is likely, comments from key policymakers have painted a less optimistic picture. Both Fed Governor Christopher Waller and Richmond FRB President Thomas Barkin observed that the labour market remains particularly robust despite the easing of inflationary pressures.

The release of UK labour market data on Thursday will provide a clear indication of the direction for the Pound Sterling in the second half of the trading week. The number of benefit claimants is forecast to fall sharply in June, from 50.4k to 23.4k month-on-month. Similarly, the quarterly annualised average earnings excluding bonuses is forecast to fall from 6.0% to 5.7%.

The UK retail sales data for Friday will complete the weekly data set for the United Kingdom. Analysts anticipate a decline in retail spending, with a projected contraction of -0.4% in June, down from a notable 2.9% surge in the previous month.

Trading recommendation: Trading predominantly Buy orders from the current price level.

On Tuesday, the EUR/USD exchange rate fluctuated around the 1.0900 mark as markets grappled with the prospect of a potential rate cut in September. Following the release of US retail sales data for June, the currency pair demonstrated further resilience. The market has fully priced in the start of the Federal Reserve's (Fed) rate cut cycle in September, with up to three quarter-point rate cuts expected over the course of the year. The European Central Bank (ECB) will hold its latest rate meeting on Thursday.

US retail sales in June remained at 0.0%, in line with expectations and down from a revised 0.3% in the previous month. The decline in retail sales has reinforced market expectations for a rate cut at the upcoming Federal Open Market Committee (FOMC) meeting on 18 September. The decline in US retail sales, coupled with the recent cooling of last week's Consumer Price Index (CPI) data, increases the likelihood of a rate cut in September. The CME's FedWatch tool indicates that markets now anticipate a near 100% probability of at least a quarter-point rate cut in September, with the potential for up to three additional cuts through 2024.

It is anticipated that the ECB will maintain the current interest rates on Thursday, as policymakers await further indications of improvement in the data following the initial quarter-point rate cut in June.

Trade recommendation: We follow the level of 1.0900, when fixing above it we take Buy positions, when rebounding we take Sell positions.

The USD/JPY currency pair is trading at a stronger level around 158.30 on Tuesday in the early hours of Asian trading. The increase in the value of the pair is being driven by a moderate rebound in the US dollar (USD). Investors will be monitoring the US retail sales data for June and the speech by Federal Reserve (Fed) Governor Adriana Kugler.

On Monday, Fed Chairman Jerome Powell stated that three measures of US inflation this year "provide some reassurance" that inflation is on track to reach the Fed's target in a sustainable manner. This suggests that a move to lower interest rates may be imminent. Bank of San Francisco President Mary Daly stated that inflation is cooling, reinforcing confidence that it is on track to reach 2% as anticipated. However, Ms. Daly stated that additional information is required to make an informed decision regarding interest rates.

The possibility of a reduction in US borrowing costs is leading to growing speculation that this could have an adverse effect on the US dollar in the near term. CME's FedWatch tool indicates that the market is currently pricing in a 100% probability of a 25-basis-point cut to the Fed funds rate at the Federal Open Market Committee (FOMC) meeting in September.

The potential for currency intervention by the Japanese authorities may provide some support to the Japanese Yen (JPY). On Friday, Japan's Finance Minister Shunichi Suzuki emphasised that rapid currency fluctuations are undesirable. Meanwhile, Japan's Chief Cabinet Secretary Yoshimasa Hayashi stated that he is "ready to take all possible measures in the forex market".

Trade recommendation: Trading predominantly Sell orders from the current price level.

The GBP/USD pair saw some selling activity during the Asian session on Monday, resulting in a three-day winning streak reaching its highest point since July 2023 at 1.3000. Spot prices are currently trading at 1.2965, representing a slight decline of 0.15% on the day. This is occurring against a backdrop of modest US dollar (USD) strength, although any meaningful move to the downside seems unlikely.

The criticism of US presidential candidate Donald Trump on Sunday increased political uncertainty and prompted safe haven flows, allowing the US dollar to recover some of Friday's decline to more than three-month lows. Nonetheless, the expectation that the Federal Reserve will soon commence its rate cut cycle is likely to persist, acting as a headwind for the dollar and providing support for GBP/USD.

CME Group's FedWatch tool indicates that there is a 90%+ probability that the Federal Reserve will cut borrowing costs by 25 basis points in September. Furthermore, market expectations have shifted towards the possibility of another interest rate cut in December, following the release of softer-than-anticipated US consumer inflation data last week. This could dissuade traders from placing new bullish bets on the US dollar.

In contrast, the British Pound (GBP) is benefiting from the diminished likelihood of a Bank of England (BoE) rate cut in August, particularly in light of data released last week indicating that the UK economy expanded at a faster-than-anticipated 0.4% in May. This in turn prompts some caution before confirming that GBP/USD may have formed a short-term top and is positioned for a significant fall.

The market is now awaiting the release of the US manufacturing sector business activity index from Empire State. However, the focus will remain on the speech by Fed Chairman Jerome Powell, which, along with US Treasury bond yields and broader risk sentiment, will have an impact on the USD exchange rate. Nevertheless, the aforementioned fundamental backdrop supports the prospects for some dip-buying in GBP/USD.

Trading recommendation: Trading predominantly Buy orders from the current price level.

The Euro-dollar pair tested a fresh five-week high on Thursday, helped by a broad market sell-off in the US dollar after US consumer price index (CPI) inflation data softened to the slowest rate of price growth since late 2021. Growing market hopes for an acceleration in the pace of rate cuts have kept market sentiment high ahead of Friday's trading session. However, an expected rise in the US wholesale producer price index (PPI) could spoil the bullish mood. European data on Thursday did little to energize Euro traders: the final consumer price index (HICP) in Germany came in at 2.5% y/y, as expected.

US CPI inflation came in below expectations in June. Annualized core CPI inflation fell to 3.0% y/y from the previous reading of 3.3%, beating the forecast of 3.1%. In addition, June CPI inflation fell -0.1% m/m from 0.0% in the previous month and below expectations of 0.1%.

In the week ending July 5, U.S. initial jobless claims fell to 222k from a revised 239k in the previous week and above the forecasted 236k. This decline in jobless claims brought the four-week average down to 233.5k from the previous 238.75k.

With US CPI inflation slowing rapidly, market expectations of a rate hike by the Federal Reserve (Fed) now point to the possibility of three quarter-point rate cuts in 2024. CME's FedWatch tool shows a 95 percent increase in the probability of a rate cut in September.

With the release of US CPI data this week, all that remains is Friday's Producer Price Index (PPI) wholesale inflation, which could disrupt the plans of those hoping for a rate cut. The core PPI for the year ending in June is expected to rise to 2.5% from a previous reading of 2.3% due to businesses facing higher cost pressures than the Fed would like.

Trading recommendation: Trade mainly with buy orders at the price level of 1.0875. Consider sell orders at the price level of 1.0845.

The USD/JPY pair is trading around 161.60, breaking a three-day winning streak in Thursday's early Asian session. Investors will be focused on the Consumer Price Index (CPI) data for June, due for release on Thursday. Federal Reserve (Fed) Governor Rafael Bostic will speak.

Fed Chairman Jerome Powell acknowledged progress on inflation, but Powell said it is not worth lowering the discount rate until there is confidence that inflation will move steadily toward the Fed's 2% target.

Traders expect the U.S. Federal Reserve to keep the benchmark interest rate in the 5.25-5.5% range at its next meeting on July 30-31. The US CPI inflation report will be released on Thursday and further progress on inflation could lead to key changes in the policy statement, paving the way for a rate cut in September.

On the other hand, growing speculation that the Bank of Japan (BoJ) will be forced to raise interest rates at its July meeting is providing some support for the Japanese Yen (JPY). Peter Boockvar, CFO of US-based Bleakley Financial Group, believes that a weaker yen will force the BoJ to "react sooner rather than later".

Trading recommendation: Trade predominantly with Buy orders from the current price level