Dollar Dominance Persists
Market Analysis for Week Number 18 2024
Monday, 29 April 2024 - Week 18: Central bank policies, geopolitical tensions, and upcoming economic data releases are expected to play a crucial role in shaping currency pair outlooks over the coming weeks. As the second quarter of 2024 progresses, major currency pairs such as USD/JPY, EUR/USD, GBP/USD, and USD/CHF are anticipated to experience volatility but ultimately stabilise as the market digests the evolving monetary policy stances and economic conditions.
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USD/JPY: Volatility Persists, Stabilisation on the Horizon
The USD/JPY pair is expected to face continued volatility in the near term, driven by the diverging monetary policies of the Federal Reserve and the Bank of Japan (BoJ). Despite the recent sharp drop in the pair, the BoJ's accommodative stance and the relatively stable interest rate environment in Japan may limit significant appreciation of the Japanese yen. As the market assesses the impact of the BoJ's monetary policy and the gradual improvement in economic conditions, the USD/JPY pair is likely to stabilise over the medium term.
EUR/USD: Navigating Mixed Signals Towards Equilibrium
The EUR/USD pair is anticipated to face heightened volatility in the coming days, influenced by the upcoming economic data releases and the outcome of the Federal Reserve's monetary policy meeting. The gradual recovery of the Euro Area economy, coupled with the European Central Bank's (ECB) restrictive stance, could provide support for the euro. However, the US dollar's strength, backed by the Fed's data-dependent approach to future rate adjustments, may limit the upside potential for the EUR/USD pair, ultimately leading to its stabilisation.
GBP/USD: Resilience Amid Political Uncertainty and Economic Challenges
The GBP/USD pair is expected to stabilise in the coming weeks, despite the mixed signals from the UK economy and the ongoing political uncertainty. The Bank of England's (BoE) hawkish stance, aimed at combating inflationary pressures, may provide support for the British pound. However, the gradual easing of inflationary pressures and the Fed's monetary policy decisions could limit the downside potential for the GBP/USD pair, contributing to its overall stability.
USD/CHF: Consolidation with an Upward Bias
The USD/CHF pair is likely to consolidate with an upward bias, driven by the diverging monetary policy paths of the Swiss National Bank (SNB) and the Federal Reserve. The relative stability of the Swiss franc, supported by reduced inflationary pressures and the SNB's aim to support economic activity, may be offset by the US dollar's strength. As investors assess the impact of central bank decisions and the evolving economic landscape, the USD/CHF pair is expected to maintain a gradual upward trajectory.
Upcoming Events and Geopolitical Factors
Forex traders must remain vigilant and closely monitor several key events and ongoing geopolitical situations that may impact currency pairs in the coming weeks. These include central bank policy meetings, economic data releases, the ongoing conflict between Israel and Hamas in Gaza, China's concerns over Japan's proposed export control measures on semiconductors, and the US-Taiwan trade negotiation talks.
As the global economic landscape continues to evolve, forex traders should adapt their strategies accordingly to navigate the complex and dynamic market environment. By closely monitoring the developments in monetary policies, economic indicators, and geopolitical events, traders can make informed decisions and capitalise on the opportunities presented by the forex market in the second quarter of 2024.
Gavin Pearson
Retail trader since 2008
Specialises in forex
Funded account from the 5ers.com
Member of the eToro Popular Investors Program
Regular contributor to FXStreet.com analysis and education pages
Returned 27% in 2022 and -2.7% in 2023
Exclusively forex focused
Copy Trading available at eToro
Disclaimer
Past performance is not indicative of future results
Trading involves risk, and you could lose money
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